Direct Tax Code | New Tax Codes 2009
The govt of India has introduced a new direct tax code that seeks to simplify the tax regime in the country.
This was a much awaited proposal as the government currently calculates taxes based on the Income Tax Act 1961.
This code (Read: Direct Taxes Code full text) is expected to replace the existing income tax laws.
However, there is a catch. According to the new proposals, all interest on savings will be taxed from 2011 onwards.
The main proposals of the new code are as follows:
- Income tax rates slash
- Most exemptions to go
- Interest on savings to be taxed
- Up to Rs 1.6 lakh: No tax
- 10 per cent tax for income of Rs 10 lakh (Rs 1.2 lakh in hand)
- 20 per cent tax for Rs 25 lakh income (Rs 2.60 lakh more in hand)
- 30 per cent tax for income over Rs 25 lakh
- To raise deduction limits for savings upto Rs 3,00,000
- Corporate Tax: Down from 30 per cent to 25 per cent
- Wealth tax to be levied for wealth above Rs 50 crore
Former minister of finance and now home minister, P Chidambaram, who had initiated work on the proposed code during his tenure, said the direct tax code was outdated and it needed a revamp.
