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By

Alok Birewar

030301055

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DTC removes most of the categories of exemptedincome. Equity Mutual Funds (ELSS), Term deposits,NSC (National Savings certificates), Unit Linked

Insurance Plans (ULIPs), Long term infrastructuresbonds, house loan principal repayment, stamp duty andregistration fees on purchase of house property will losetax benefits.

Only half of Short-term capital gains will be taxed

Surcharge and education cess are abolished.

For incomes arising of House Property: Deductions forRent and Maintenance would be reduced from 30% to20% of the Gross Rent. Also all interest paid on house

loan for a rented house is deductible from rent. Tax exem tion on Education loan to continue.

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Tax exemption on LTA (leave travel allowance) isabolished.

Taxation of Capital gains on listed securities held for

more than a year will not be taxed. If held for less than ayear, it will be taxed at 5%, 10% or 15%

Tax on dividends: Dividends will attract 5% tax.

Under Sec 80C deduction of up to 1.5 lakh allowed

a) INR Rs.1 lakh on Pension, PF and Gratuity funds,b) Up to 50,000 for expenditure on tuition fees, pure lifeinsurance premium and health cover

Medical reimbursement : Max limit for medicalreimbursements has been increased to rupees 50,000per year from current rupees 15,000 limit.

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Common threshold Income Tax exemption limit for men and

women proposed at Rs. 2 lakh per annum (proposed), up from

Rs. 1.8 lakh

10 per cent tax on annual income between Rs. 2-5 lakh, 20per cent on between Rs. 5-10 lakh, 30 per cent for above Rs.

10 lakh

Tax burden at highest level will come down by Rs. 41,040

annually Proposal to raise tax exemption for senior citizens to Rs. 2.5

lakh from Rs. 2.4 lakh currently.(NOTE:- Union budget 2011-

12 already has proposed it.)

Corporate Tax to remain at 30 per cent but without surcharge

and cess.

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Proposal to levy dividend distribution tax at 15 per cent.

Exemption for investment in approved funds and insuranceschemes proposed at Rs. 1.5 lakh annually, against Rs. 1.2

lakh currently Proposed bill has 319 sections and 22 schedules against 298

sections and 14 schedules in existing IT Act.

Once enacted, DTC will replace archaic Income Tax Act.

However, many provisions in Income Tax Act will be a part of

DTC as well. Mutual Funds/ULIP dropped from 80C deductions : Income

from equity-oriented mutual funds or ULIP shall be subject totax @ 5%

Fringe benefits tax will be charged to the employee rather than

the employer.

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