If the Standing Committee on Finance has its way, then one may not have to pay income-tax up to the income of Rs 3 lakh, which, with some tax planning, can be upped to Rs 6.20 lakh a year.
A person familiar with the development told Business Line : “The majority view was to raise the personal income tax slab to Rs 3 lakh and it has been agreed upon. The Committee is also in favour of higher deduction for tax relief.” At present, no tax is levied on annual income up to Rs 1.80 lakh for a male below the age of 60 years and Rs 1.90 lakh per annum for women tax-payers under 60. Senior citizens enjoy a higher exemption limit.
Separate exemptions
The Committee adopted its report on Direct Tax Code 2010, which includes these recommendations. The report is likely to be submitted to the Lok Sabha Speaker within a week.
At present, there are separate exemption limits for females below the age of 60, senior citizens in the age bracket of 60-80 years and senior citizens above the age of 80 years. The Direct Tax Code proposes to do away with gender-based slabs. It has provided just two categories, one for persons (male/female) below the age of 65 years and another for persons above the age of 65 years.
However, the Standing Committee is in favour of extending the separate slab for males and females. “We do not want to be criticised for not taking care of females. We feel the separate exemption should stay for some more time,” a committee member said.
Deductions for tax relief
The Committee suggests hiking the limit for deduction as proposed by the DTC. It has also advised some new means for deduction. “There was an agreement over incentivising long term savings and social security expenditure. So, the suggestion was given for higher limit,” he said.
The Committee has also suggested separate deduction limits for expenditure incurred towards premium on health insurance not just for parents but also for grand parents. It also feels the Government needs to provide benefit on expenditure for higher/professional education.
The Committee has not suggested any change in corporate tax. The DTC proposed 30 per cent rate for corporate without any cess and surcharges.
Shishir.s@thehindu.co.in