New Delhi, Feb 10 : Hiking the exemption slab for personal income tax from Rs 1.8 lakh to Rs 3 lakh, indexing rates to inflation and freeing assesses with up to Rs 5 lakh annual income from the burden of filing returns are among the recommendations being considered by Parliament's standing committee on finance, reports Times of India.
The draft report of the committee on UPA-2's ambitious Direct Tax Code is expected to suggest several amendments including linking tax slabsto consumer price indexes to allow an automatic adjustment of rates.
The proposal to index tax rates to inflation can do away with the need to mention tax rates, even if they are unchanged, in the budget statement made by the finance minister every year.
Tax rates the committee is expected to propose are 10% for the slab of Rs 3 lakh to Rs 10 lakh, 20% for upto Rs 20 lakh and 30% beyond that. Three crore assesses will stand to benefit from not having to file returns if the committee's view of a Rs 5 lakh ceiling is accepted.
There are several recommendations the committee is expected to consider at its meeting on Friday and while the panel headed by BJP leader Yashwant Sinha is not rejecting the DTC bill, it hopes the government is receptive to its suggestions.
The DTC is an important UPA-2 reform backed strongly by finance minister Pranab Mukherjeeand will test the government's preparedness to build bridges with the opposition on important legislation. BJP will find it hard to be obstructionist but can bargain hard as it did over the pension bill where Mukherjee accepted its insistence on an assured rate of return option.
With the budget session approaching, the government has been keen to push ahead with reforms that have been hit either by slow decision-making, internal opposition in the UPA or repeated showdowns with the main opposition BJP that led to blockades in Parliament.
The committee has also considered changes in assessment of property taxes by mooting parameters for commercial and non-commercial use. The amendments proposed are intended to reduce the burden on the non-commercial category while also rationalizing procedures and assessment parameters.
Changes in tax benefits for life insurance products are also being considered by the panel with benefits being enhanced in comparison to the bill's proposals. The DTC's proposals on limiting deductions to premiums that do not exceed a certain percentage of the sum assured may be reviewed as well.