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New tax code in House, kicks in from 2012

business Updated: Aug 31, 2010 01:42 IST
HT Correspondent

Finance Minister Pranab Mukherjee introduced the the much-awaited Direct Taxes Code (DTC) Bill in the Lok Sabha on Monday that proposed a restructuring of income tax slabs—a move that will leave more money in the hands of people.

What it means for you

Income tax exemption limit rises to R2 lakh p.a from R1.6 lakh p.a.

Income between R2-5 lakh to attract 10% tax, income of R5-10 lakhs, 20%, and 30% for above R10 lakh

Wealth tax at 1 % p.a. for wealth above R1 crore

I-T deduction limit on tax savings instruments stays at R1 lakh

Tax deduction of upto R50,000 per annum on tuition fee of children, and health insurance premium

Cap on deduction on payment of interest on the home loan maintained at R1.5 lakh p.a.

Once legislated, the bill will replace the archaic Income Tax Act by rationalising tax slabs. It is proposed to be introduced from April 1, 2012.

The bill has proposed to raise the basic exemption limit to R2 lakh per annum from R1.6 lakh per annum.

The bill has proposed to fix corporate income tax rate at 30 per cent inclusive of surcharges and cesses — down from 33 per cent at present.

It has also proposed minimum alternate tax of 20 per cent, instead of 18 per cent, on book profits of companies.

After introduction in Parliament, the bill will be examined by a Standing Committee and based on its recommendations the government would consider further amendments in the bill.