Glimpse of Direct Tax Code
Indian Union government is, currently, following, Direct Tax Code (DTC) in India from April 1, 2011. This DTC has replaced the previous Income tax structure in India, leaving more money in the hands of people.
Although, During the budget 2010 presentation, the finance minister Mr. Pranab Mukherjee said to enforce the new direct tax code (DTC) from 1st of April, 2011, but same could not be fulfilled and now it will be applicable from 1st April, 2012. Union government is determined to implement that Direct Tax Code (DTC) in India by April 1, 2011. The new DTC will replace the existing Income tax structure in India, leaving more money in the hands of people. Here are the main highlights of Direct Tax Code (DTC)
Here are the main highlights of Direct Tax Code (DTC)
a)
Tax
exemption limit for men to be raised from Rs 160000 to Rs 180000. No new tax
exemption limit for women.
b)
1%
interest subvention (subsidy) on home loans up to Rs 15 lakhs, where the cost
of house does not exceed Rs 25 lakhs.
c)
Priority
home loan limit raised to Rs 25 lakhs from Rs 20 lakhs
d)
Relaxation
in e-filing norms for 'small taxpayers' announced
e)
To
extend Rs 20,000 exemption for investment in infra debt funds for another year.
f)
Senior
citizens eligibility age reduced from 65 to 60. Tax Exemption limit raised to
Rs 2.5 lakhs
g)
Tax
exemption limit for citizens above 80 years (very senior citizens) raised to Rs
5 lakhs
General Tax Incentives for Investors :
The Government offers many incentives to investors in India with a view to stimulating industrial growth and development. The incentives offered are normally in line with the government's economic philosophy, and are revised regularly to accommodate new areas of emphasis. The following are some of the important incentives offered, which significantly reduce the effective tax rates for the beneficiary companies:
Five year tax holiday for:
a)
Power
projects.
b)
Firms
engaged in exports.
c)
New
industries in notified states and for new industrial units established, in
electronic hardware/software parks.
d)
Export
Oriented Units and units in Free Trade Zones.
e)
As of
1994-95 budget firms engaged in providing infrastructure facilities, can also
avail of this benefit.
f)
Tax
deductions of of 100 per cent of export profits.
g)
Deduction
of 30 per cent of net (total) income for 10 years for new industrial
undertakings.
h)
Deduction
of 50 per cent on foreign exchange earnings by construction companies, hotels
and on royalty, commission etc. earned in foreign exchange.
i)
Deduction
in respect of certain inter-corporate dividends to the extent of dividend
declared.
Tax Rebates for Corporate Sector
a)
The
classical system of corporate taxation is followed.
b)
Domestic
companies are permitted to deduct dividends received from other domestic
companies in certain cases.
c)
Inter
Company transactions are honored if negotiated at arm's length.
d)
Special
provisions apply to venture funds and venture capital companies.
e)
Long-term
capital gains have lower tax incidence.
f)
There
is no concept of thin capitalization.
g)
Liberal
deductions are allowed for exports and the setting up on new industrial
undertakings under certain circumstances. There are liberal deductions for
setting up enterprises engaged in developing, maintaining and operating new
infrastructure facilities and power-generating units.
h)
Business
losses can be carried forward for eight years, and unabsorbed depreciation can
be carried indefinitely. No carry back is allowed.
i)
Specula
tax provisions apply to activities carried on by nonresidents.
j)
A
minimum alternative tax (MAT) on corporations has been proposed by the Finance
Bill 1996.
k)
Dividends,
interest and long-term capital gain income earned by an infrastructure fund or
company from investments in shares or long-term finance in enterprises carrying
on the business of developing, monitoring and operating specified
infrastructure facilities or in units of mutual funds involved with the
infrastructure of power sector is proposed to be tax exempt.
Important industry measures
a)
Financial
Year 2011-12 divestment target at Rs 40000 crore
b)
Education
sector is allocated Rs 52,057 crores
c)
Infrastructure
spending to rise by 24%. To allocate Rs 58,000 crores for Bharat Nirman
projects
d)
RBI
to be allowed to grant more banking licenses
e)
Considering
a new fertiliser policy for urea.
f)
Banks
allowed to raise tax-free infrastructure bonds worth Rs 30,000 crores
g)
Hybrid
auto parts to get custom duty exemption
h)
Ship-owners
allowed duty-free spare-parts import
i)
Standard
excise duty and service tax at 10%. Minimum Alternate Tax (MAT) to be raised
18.5% from 18%. Foreign dividend tax rate cut to 15% for Indian companies
j)
Cold-chain
equipments exempted from excise duty
k)
Health
sector gets Rs 26760 crores, PSU banks Rs 6000 crores
Income Tax Slabs
|
Income Tax Slab (in Rs.)
|
Tax
|
|
0 to 2,00,000 (2,50,000 for senior citizens)
|
No Tax
|
|
2,00,001 to 5,00,000
|
10%
|
|
5,00,001 to 10,00,000
|
20%
|
|
Above 10,00,000
|
30%
|
a)
Exemption
for interest on housing loan for self-occupied property will be 1.5 lakhs per
year (same as earlier).
b)
Only
half of Short-term capital gains will be taxed. Long term capital gains (From
equities and equity mutual funds, on which STT has been paid) exempted from
income tax.
c)
Tax
exemption at all three stages (EEE) - savings, accretions and withdrawal’s to
be allowed for provident funds (GPF, EPF and PPF), NPS (new pension scheme
administered by PFRDA), Retirement benefits (gratuity, leave encashment, etc),
pure life insurance products & annuity schemes.
d)
Surcharge
and education cess abolished.
e)
For
incomes arising of House Property: Deductions for Rent and Maintenance reduced
from 30% to 20% of the Gross Rent. Also all interest paid on house loan for a
rented house will be deductible from rent.
f)
Tax
exemption on LTA (leave travel allowance) is abolished.
g)
Tax
exemption on Education loan to continue.
h)
Corporate
tax reduced from 34% to 30% including education cess and surcharge.
i)
Taxation
of Capital gains from property sale : For sale within one year, gain is to be
added to taxable salary. For long term gain (after one year of purchase), gain
after indexation will be added to taxable income and taxed at per the tax slab.
j)
Max
limit for medical reimbursements has been increased to 50,000 per year.
(currently 15,000)
Learn how to calculate your Income Tax
Step I : Gross Income
Calculate your Annual Income. (Monthly
Income * 12)
Step II : Donations
Calculate the total donations you have
made towards various institutions in accordance to Income Tax Rules.
Step III : Savings
Calculate your total savings. This may
include all the savings and investments mentioned in Income
Tax Saving Schemes Sections.
Step
IV : Taxable Income Follow the following rule to calculate your taxable
income
Step I - ( Step II + Step III) = Taxable Income
Step V : Income Tax
When you have calculated your taxable
income, refer to the following slabs to calculate your Income Tax accordingly.
Choose the slab according to your income and calculate your Income tax.
Income
tax slabs 2011-2012 (for Men) in India:
The threshold income tax exemption limit for men has been revised
to Rs 1,80,000 than the previous limit of Rs 1,60,000.There will be a minimum
saving of Rs 2000 in income tax than previous year.
|
Income Tax Slab (in Rs.)
|
Tax
|
|
Up to Rs 1,80,000
|
No Tax
|
|
1,80,001 to 5,00,000
|
10%
|
|
5,00,001 to 8,00,000
|
20%
|
|
Above 8,00,000
|
30%
|
Income
tax slabs 2011-2012 (for Women) in India:
When the
government charges a fee on a product, income or activity to be used to finance
government expenditure gets known as tax. Government imposes two kinds of taxes
:
Direct tax- tax levied on personal or corporate income
Indirect tax- tax levied on price of a good or service
Public goods and services are provided by government and quasi-government agencies which tend to finance themselves largely through taxes.
There is no change in tax structure for women.
|
Income Tax Slab (in Rs.)
|
Tax
|
|
0 to 1,90,000
|
No Tax
|
|
1,90,001 to 5,00,000
|
10%
|
|
5,00,001 to 8,00,000
|
20%
|
|
Above 8,00,000
|
30%
|
Income tax slabs 2011-2012 (for Senior Citizens) in India:
A new income tax bracket for senior citizens has been introduced which are above eighty years of age. The tax exemption limit to senior citizens above 80 of age has been increased to Rs. five lakhs from the existing 2.4 lakhs. For senior citizens between 60 to 80 years the tax exemption limit has been revised to Rs 2,50,000 from Rs 2,40,000 thus an increase of Rs 10,000 only. The senior citizen age has also been reduced to 60 years from 64 years.
|
Income Tax Slab (in Rs.)
|
Tax
|
|
Up to Rs 5,00,000
|
No tax / exempt
|
|
5,00,001 to 8,00,000
|
20%
|
|
Above 8,00,000
|
30%
|
Step VI: Education Cess
Add 3 % of your taxable income as the Educational Cess to the Income Tax amount calculated in step V.
TAX CALCULATION EXAMPLES:
Example 1:
Mrs. Kuldeep is 35 year old and earning 8 lac annually. (Male)
Calculation
|
Tax on Income up to 1,60,000
|
Nil
|
|
Tax on Income between 1,60,000-5,00,000 (@ 10%)
|
34,000
|
|
Tax on Income between 5,00,000-8,00,000 (@ 20%)
|
60,000
|
|
Total
|
94,000
|
|
Educational Cess(@ 3% of Total Tax)
|
2,820
|
|
Net Tax Payable
|
96,820
|
Example 2:
Mrs. Harminder Kaur is 32 year old and earning 12 lac annually. (Female)
Calculation
|
Tax on Income up to 1,90,000
|
Nil
|
|
Tax on Income between 1,90,000-5,00,000 (@ 10%)
|
31,000
|
|
Tax on Income between 5,00,000-8,00,000 (@ 20%)
|
60,000
|
|
Tax on Income between 8,00,000- 12,00,000 (@30%)
|
1,20,000
|
|
Total
|
2,11,000
|
|
Educational Cess(@ 3% of Total Tax)
|
6,330
|
|
Net Tax Payable
|
2,17,330
|
Example 3:
Mrs. Rajesh is 67 years old and earning 8 lac annually. (Senior Citizen)
Calculation
|
Tax on Income up to 2,40,000
|
Nil
|
|
Tax on Income between 2,40,000-5,00,000 (@ 10%)
|
26,000
|
|
Tax on Income between 5,00,000-8,00,000 (@ 20%)
|
60,000
|
|
Total
|
86,000
|
|
Educational Cess(@ 3% of Total Tax)
|
2,580
|
|
Net Tax Payable
|
88,580
|
INCOME TAX SLABS FOR MEN, WOMEN AND SENIOR CITIZENS FROM FINANCIAL
YEAR 2001 TO 2011
|
Tax
|
MEN
|
WOMEN
|
SENIOR CITIZEN
|
|
financial year 2011-12
|
|||
|
Basic Exemption
|
200000
|
190000
|
250000
|
|
10% tax
|
200001 to 500000
|
190001 to 500000
|
250001 to 500000
|
|
20% tax
|
500001 to 1000000
|
500001 to 800000
|
500001 to 800000
|
|
30% tax
|
Above 1000001
|
Above 800000
|
Above 800000
|
|
financial year 2010-11
|
|||
|
Basic Exemption
|
160000
|
190000
|
240000
|
|
10% tax
|
160001 to 500000
|
190001 to 500000
|
240001 to 500000
|
|
20% tax
|
500001 to 800000
|
500001 to 800000
|
500001 to 800000
|
|
30% tax
|
above 800000
|
above 800000
|
above 800000
|
|
financial year 2009-10
|
|||
|
Basic Exemption
|
160000
|
190000
|
240000
|
|
10% tax
|
160001 to 300000
|
190001 to 300000
|
240001 to 300000
|
|
20% tax
|
300001 to 500000
|
300001 to 500000
|
300001 to 500000
|
|
10% tax
|
above 500000
|
above 500000
|
above 500000
|
|
financial year 2008-09
|
|||
|
Basic Exemption
|
150000
|
180000
|
225000
|
|
10% tax
|
150001 to 300000
|
180001 to 300000
|
225001 to 300000
|
|
20% tax
|
300001 to 500000
|
300001 to 500000
|
300001 to 500000
|
|
30% tax
|
above 500000
|
above 500000
|
above 500000
|
|
financial year 2007-08
|
|||
|
Basic Exemption
|
110000
|
145000
|
195000
|
|
10% tax
|
110001 to 150000
|
145001 to 150000
|
Nil
|
|
20% tax
|
150001 to 250000
|
150001 to 250000
|
195001 to 250000
|
|
30% tax
|
above 250000
|
above 250000
|
above 250000
|
|
|
note:- there is a 10% surcharge if income is greater than 10
lakh
|
|
|
|
financial year 2006-07 & 2005-06
|
|||
|
Basic Exemption
|
100000
|
135000
|
185000
|
|
10% tax
|
100001 to 150000
|
135001 to 150000
|
Nil
|
|
20% tax
|
150001 to 250000
|
150001 to 250000
|
185001 to 250000
|
|
30% tax
|
above 250000
|
above 250000
|
above 250000
|
|
financial year 2004-05 & 2003-04
|
|||
|
Basic Exemption
|
50000
|
50000
|
50000
|
|
10% tax
|
50001 to 60000
|
50001 to 60000
|
50001 to 60000
|
|
20% tax
|
60001 to 150000
|
60001 to 150000
|
60001 to 150000
|
|
30% tax
|
above 150000
|
above 150000
|
above 150000
|
|
|
note:- there is a 10% surcharge if income is greater than 8.5
lakh
|
|
|
|
financial year 2002-03
|
|||
|
Basic Exemption
|
50000
|
50000
|
50000
|
|
10% tax
|
50001 to 60000
|
50001 to 60000
|
50001 to 60000
|
|
20% tax
|
60001 to 150000
|
60001 to 150000
|
60001 to 150000
|
|
30% tax
|
above 150000
|
above 150000
|
above 150000
|
|
|
note:- there is a 5% surcharge if income is greater than 60000.
|
|
|
|
financial year 2001-02
|
|||
|
Basic Exemption
|
50000
|
50000
|
50000
|
|
10% tax
|
50001 to 60000
|
50001 to 60000
|
50001 to 60000
|
|
20% tax
|
60001 to 150000
|
60001 to 150000
|
60001 to 150000
|
|
30% tax
|
above 150000
|
above 150000
|
above 150000
|
|
|
note:- there is a 2% surcharge if income is greater than 60000.
|
|
|
No comments:
Post a Comment