| India is soon going to have a new set of rules for | | | | suggested 10% tax on income from Rs 1.60-10 |
| direct taxes, which will replace the 50-year-old | | | | lakhs and 20% on income between Rs 10-25 |
| Income Tax Act. | | | | lakhs and 30% beyond that. Revenue secretary |
| The so-called Direct Tax Code, which is scheduled | | | | says these slabs are only illustrative and they will |
| to come into force from financial year 2011-12, | | | | be fixed at the time of notifying the tax code |
| had prescribed removal of almost all tax rebates | | | | HOME LOANS:- Government decides to continue |
| in individual investments but also proposed raising | | | | with the major tax incentive on housing loans. |
| the income limits for various tax slabs drastically. | | | | Revised draft says home buyers will continue to |
| However, the proposals drew sharp reactions and | | | | get tax benefit on payment of interest on home |
| after reviewing some 1,600 public suggestions | | | | loans up to Rs 1.5 lakh annually. Actual rental |
| comments, the government on Tuesday unveiled | | | | income will be taxed. |
| a more polished version of the code, which toned | | | | INSURANCE AND ULIPS:- No tax proposed on life |
| down some of the proposals. | | | | insurance products under |
| As per the revised paper, provident funds and | | | | exempt-exempt-exempt norm. New Ulips issued |
| pure life insurance products will continue to enjoy | | | | after DTC becomes operational will be taxed on |
| the so-called exempt-exempt-exempt - | | | | maturity or withdrawal. Existing Ulips will be |
| suggesting tax exemptions in the three stages of | | | | exempt from tax either on maturity or |
| investment, accrual of gains and withdrawal of | | | | withdrawal midway. |
| investment - a status they now enjoy. | | | | EQUITY MUTUAL FUNDS: - The draft DTC |
| "It is proposed to provide the EEE | | | | proposes long-term capital gains tax on units of |
| (exempt-exempt-exempt) method of taxation for | | | | equity funds. At present, equity funds that lock in |
| government provident fund, public provident fund | | | | investments for more than three years enjoy tax |
| and recognised provident funds..." the discussion | | | | exemption as there is no long-term capital gains |
| paper said. | | | | tax. The draft DTC proposes to compute |
| The paper clarified that the EET | | | | long-term gains on equity and equity funds after |
| (exempt-exempt-tax) regime should be restricted | | | | allowing a deduction at a specified percentage of |
| to new savings instruments after DTC comes | | | | capital gains without any indexation. |
| into effect, and the same should not apply to | | | | STOCKS INVESTMENT: - The difference between |
| existing saving instruments. | | | | long-term and short-term capital gains has been |
| Ulips or unit-linked insurance plans - which have | | | | eliminated. Capital gains will be treated as income |
| been at the centre of a public debate of late - | | | | from ordinary sources and taxed at applicable |
| have been brought under the EET regime after | | | | rates. Specific rate of deduction for capital gains is |
| the DTC comes into force. | | | | to be finalised. But not tax on capital gains from |
| Similarly, stocks investors will no longer be able to | | | | savings schemes. |
| enjoy tax-free gain from long-term investment in | | | | PROVIDENT FUND: - The proposal to tax |
| equities as the DTS proposes to treat both | | | | government provident fund (GPF), public provident |
| short-term capital gains as well as long-term | | | | fund (PPF) and pension funds withdrawals has |
| capital gains for tax calculation purposes. | | | | been dropped. It is proposed to provide the EEE |
| Moneyguruindia tax experts analysed the | | | | (exempt- exempt-exempt) benefit to GPF, PPF |
| proposals threadbare and came up with a detailed | | | | and recognised provident funds. First draft had |
| analysis of the tax incidence on various | | | | proposed to tax all savings schemes including PF's |
| investment instruments as proposed under the | | | | at the time of withdrawal. |
| new rules. | | | | PENSION PRODUCTS: - Revised draft puts |
| PAY AND PERKS:- The proposal to bring in | | | | pensions administered by PFRDA, including pension |
| perquisites like government accommodation to be | | | | of government employees recruited since January |
| part of salary has also been dropped. All perks will | | | | 2004, under EEE treatment, means no tax any |
| continue to be taxed as per existing norms. First | | | | stage. "In the absence of adequate social security |
| draft didn't not find favour with the salaried class | | | | benefits, taxation of withdrawals from retirement |
| INCOME TAX SLABS:- Revised DTC silent on | | | | benefits would be harsh," says the revised DTC. |
| personal income tax rates and slabs. First draft | | | | |