Amendment made in 2016-17 budget in relation to service tax provides the arrest of assesses in case there is default in the remittance of service tax collected from parties.
Will the government withdraw tax benefits offered to corporates investing in mutual funds? If so how will the mutual fund indutsry be affected. A discussion with Dhiren Kumar of Value Research Online
With an objective to improve the efficiency and equity of the Indian Tax System by broadening the tax base through minimizing the exemptions, remove the ambiguity in the law and checking the erosion of the tax base through tax evasion, finance minister Mr. Pranab Mukherjee, released the draft of new direct taxes code to solicit the public opinion about the code before presenting it to parliament. He intends it to be effective from April 2011.
The code appears to be favoring salaried person in first instance. However, there are several points that are irritating to the salaried class.Main cause of concern is tax to be levied on withdrawals from the GPF/PPF/LIC schemes etc.Second concern is about the deduction of interest on loan taken for house construction. It appears that deduction on interest is not available if a person is living in his own house and showing no income from the house property. May be I could not understand the clause in its full sense.
How the provisions of draft direct tax code influence the income and how they influence the losses and gains in comparison to existing income tax rules, is shown below.
According to draft tax code, the gross salary will include the value of perquisites and profits in lieu of the salary. It will be reduced by the permissible deductions which include the following:
1. Professional tax paid
2. Transport allowance
3. Prescribed special allowance incurred in performance of duties to the extent actually incurred
4. Compensation under voluntary retirement scheme
5. Amount of gratuity
6. Commutation of pension
7. Pension received by the gallantry awardees
Deductions under item 4, 5 & 6 would be available to the extent the amounts are paid to or deposited in a retirement benefits account, After implementation of the code, amounts received from an approved retirement/superannuation fund will be taxable. Approved provident funds, superannuation funds, life insurer and New Pension System Trust etc will be the permitted savings intermediaries. Deposits will remain untaxed in these accounts but once withdrawals are made, the amount withdrawn will be treated as the income.
Salary will also include the following values as per new code:
1. The value of accommodation
2. The value of leave Travel Concession
3. The amount received on encashment of earned leave
4. Amount reimbursed for medical treatment
5. The value of medical treatment free or concessional by employer
Salary will include the income from House property. The following deductions are allowed from gross rent:
1. Amount of taxes levied by local administration (actual amount paid)
2. 20% of the gross rent as cost of repair or maintenance
3. Amount of any interest payable on capital borrowed
Important: If the gross rent is nil in the case of a self-occupied property, no deduction for taxes or interest will be allowed.
A. Deductions upto a limit of Rs 3.0 lakh will be allowed as per provisions of new code. These deductions will include the following items:
1. Approved provident funds, superannuation funds, life insurer and New Pension System Trust etc will be the permitted savings intermediaries.
2. Deduction for amount paid towards payment of tuition fees of children
B. Deduction of Rs 15000 (Rs 20,000 in case of a senior citizen) in respect of medical insurance premium + Rs 15000 for parent’s medical insurance premium (Rs 20,000 if parent is a senior citizen)
C. Deduction of Rs 50,000 (Rs 75,000 in case of severe disability) for medical treatment or maintenance of disabled dependent
D. Deduction of Rs 40,000 (Rs 60,000) in case of senior citizen) for expenditure on medical treatment for prescribed diseases
E. Deduction will be allowed for interest actually paid on a loan taken for higher education for self or children/spouse
F. Deduction allowed to a company for family welfare or AIDS prevention of its employees.
G. Deductions in respect to donations
Rate of income tax:
A. For individuals other than women & senior citizens: No tax upto Rs 1,60,000
For Women: No tax upto Rs 1,90,000
For senior citizens: No tax upto Rs 2,40,000
B. For individuals other than women & senior citizens: 10% tax ( Rs 1,60,001 to Rs 10,00,000)
For Women: 10% tax ( Rs 1,90,001 to Rs 10,00,000)
For senior citizens: 10% tax ( Rs2,40,001 to Rs 10,00,000)
C. For individuals other than women & senior citizens: 20% tax ( Rs 10, 00,001 to 25,00,000)
For Women: 20% tax ( Rs 10, 00,001 to 25,00,000)
For senior citizens: 20% tax ( Rs 10, 00,001 to 25,00,000)save
D. For individuals other than women & senior citizens: 30% tax ( Rs 25, 00,001 or more)
For Women: 30% tax ( Rs 25, 00,001 or more)
For senior citizens: 30% tax ( Rs 25, 00,001 or more)