New direct tax bill in monsoon session: Pranab

The government plans to introduce the new Income-Tax Bill, based on the recommendation of the Direct Tax Code (DTC), in the Monsoon Session of Parliament. The DTC is aimed to benefit the middle-income taxpayer group.
As implementation of DTC means a complete revamp of the existing Income-Tax Act, it cannot be done by amendments. So a new bill has to be introduced in Parliament to replace the existing Act, FM Pranab Mukherjee said on Saturday. The government plans to implement the DTC from April 1,2011.
Before preparing the bill, the I-T department will circulate a revised draft after incorporating some suggestions from the public and other stakeholders. The department had circulated the original draft in November 2009 to seek comments.
Since this is a serious issue, FM said, the bill will also be referred to a Parliamentary Standing Committee for its comments (after introduction in Parliament).
This will be a time-consuming process as the committee might seek suggestions from stakeholders. Therefore, FM said, the committee will take time in giving its opinion on the bill. He hoped that the Standing Committee would finally send the bill back to Parliament in the Winter Session. After that, Parliament will take it up for debate and passage. If the DTC has to be implemented from April 1,2011,it must be passed in the Budget Session of 2011.
One of the most important aspects of the DTC is that it will tweak the slabs to reduce tax burden on the middle class. According to the proposal,the tax at the rate of 10% will start at Rs 1.6 lakh income and will continue to remain the same for income up to Rs 10 lakh.
This means that the existing taxpayers between the income slab of Rs 5 lakh and Rs 8 lakh, who will pay tax at 20% as proposed in 2010-11 Budget, will benefit. And persons with income between Rs 8 lakh and Rs 10 lakh will pay only 10% tax under DTC against 30% proposed in Budget. This means, a person having an income of Rs 10 lakh will save Rs 71,530 under the DTC.
The savings for the next tax bracket will be even higher. Under DTC, income between Rs 10 lakh and Rs 25 lakh will be taxed at 20% only, against 30% at present. Therefore, a person having income of Rs 25 lakh will save Rs 2,35,030.

Times of India, New Delhi, 28-02-2010