Direct Taxes Code draft retains exemption limit; proposes 35% super-rich tax

Apr 01 2014, 21:32 IST
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As per the current structure, there is no tax on income of up to Rs 2 lakh per annum. (Reuters) As per the current structure, there is no tax on income of up to Rs 2 lakh per annum. (Reuters)
SummaryThe revised draft of the Direct Taxes Code Bill has retained the income tax exemption limit at Rs 2 lakh and introduced a fourth slab of 35 per cent on super-rich with income exceeding Rs 10 crore.

the taxation system, has been pending since 2009 and has undergone various changes.

The fresh draft has rejected the recommendation of the Standing Committee to do away with the Securities Transaction Tax (STT), saying that "the recommendation is not acceptable as STT is required to regulate day trading".

Currently, STT is levied at different rates on sale and purchase of securities.

The draft proposes a 10 per cent tax on dividend earnings of over Rs 1 crore and a wealth tax of 0.25 per cent on assets of individuals, HUFs and trusts exceeding Rs 50 crore.

On the General Anti Avoidance Rules, the draft said they should be reviewed to bring in more clarity and the onus of proof should be on the tax authority.

As far as indirect transfers are concerned, the draft DTC has tightened the norms by suggesting that foreign companies having 20 per cent of their assets in India will have to abide by domestic laws.

Ernst & Young National Leader (International Tax Services) Jayesh Sanghvi said: "The proposals relating to the onus of proof with regard to GAAR are welcome. The reduction of the threshold from 50 per cent to 20 per cent for substantial value may continue to pose some uncertainties."

In his Budget speech, Chidambaram had said that the revised DTC was ready and will be placed in public domain for discussions.

The Finance Ministry said that of the 190 recommendations made by the Committee, 153 are proposed to be accepted wholly or with partial modifications.

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