House Panel To Discuss DTC Likely To Raise IT Exemption Limit To Rs 3 Lakh (17-Feb-2012)
The Standing Committee on Finance headed by former Finance Minister, Yashwant Sinha is to meet today to discuss the report on the Direct Taxes Code (DTC) Bill. The bill favours raising income tax exemption to Rs 3 lakh from the current Rs 1.5 lakh. Finance Minister Pranab Mukherjee had tabled the DTC Bill in Lok Sabha in August 2010 and it was referred to the Standing Committee for scrutiny. The committee had considered the draft of the report on the Bill last week but the adoption was postponed as certain issues were yet to be resolved.
The Standing Committee is likely to submit its report before the Budget session of Parliament beginning March 2012. The committee wants the government to raise the income tax exemption to Rs 3 lakh from Rs 2 lakh proposed in the original bill in view of the near double-digit inflation. Further, the parliamentary panel has scrutinized the code in detail and has suggested several changes, including further widening of income tax slabs, lowering of wealth tax threshold and anti-abuse provisions with riders to ensure that taxmen don't get discretionary powers to harass taxpayers.
The Committee has also proposed categorization of the home and commercial property for the purpose of income tax. It has suggested that these two sources should be accorded different tax treatment. It also wants the government to incorporate provisions to prevent misuse of the facilities and tax relief provided to People of Indian Origin (PIOs).
The DTC, which seeks to modernize the direct taxation system, will replace the Income Tax Act, 1961. The DTC proposes General Anti-Avoidance rule, or GAAR, that allows for examination of the real nature of transaction and invalidates arrangements entered into to avoid tax. Though the government is unlikely to introduce the DTC from April 1, 2012, as planned earlier, it may incorporate some of the provisions of the proposed law in the Budget for 2012-13, to be unveiled on March 16.
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