Direct Taxes Code Bill retains exemption limit

New Delhi: The revised draft of the Direct Taxes Code (DTC) Bill has failed to provide any relief to the salaried class by retaining personal income tax (IT) exemption limit at Rs 2 lakh. To tax the super-rich, it has introduced a fourth slab of 35 per cent on income exceeding Rs10 crore.

However, the revised draft of DTC  has accepted the recommendation that the age for senior citizens be relaxed from 65 years to 60 years.

The draft said that foreign companies with more than 20 per cent assets in India will be subjected to domestic tax laws, which will bring more indirect transfer transactions under the tax net.

The final view on the draft, which has been prepared by the finance minister P. Chidambaram, will be taken by the new government to be formed after the general elections.

The Direct Taxes Code Bill, 2010 was introduced in the Lok Sabha on 30th August, 2010. It aims to replace the existing I-T Act 1961 and overhaul the taxation system.

The Standing Comm-ittee on Finance (SCF) had recommended to the finance ministry that the personal income tax exemption limit be increased to an income of Rs3 lakh in a year and changing the tax slabs, which would have resulted in savings for the tax payers.

“The recommendation is not acceptable as it will result in huge revenue loss. The total revenue loss in personal income tax slabs and removal of cess, works out to Rs 60,000 crore,” said the Union finance ministry.

The DTC Bill, 2010 had provided a 50 per cent threshold of global assets to be located in India for taxation of income from indirect transfer in India.

“This threshold is too high. There could be a situation that a firm has 33.33 per cent assets in three countries but it will not get taxed anywhere. Accordingly, the revised code provides for a threshold of 20 per cent of global assets to be located in India for taxation of income from indirect transfer in India,” said the revised draft of the DTC Bill.