The government will take a final view on the new tax slabs in the Direct Tax Code (DTC) after it receives comments on the revised draft from the public, said union finance minister Pranab Mukherjee on Friday.
“The government will take a final view on tax slabs after receiving all the inputs,” said Mr Mukherjee. The tax structure will be revealed in the legislation, which is expected to be introduced in Parliament during the monsoon session in July, he said. “These are only discussion papers. How will I comment (on tax slabs),” he added.
There have been concerns that the government will tax individuals much more than it had proposed earlier in the first draft of DTC released in 2009. This is because in the revised draft of DTC released on Tuesday, the Centre proposed a number of tax exemptions and there is a fear it may revise tax slabs to more conservative levels so that it doesn’t lose any revenue.
The revised draft of DTC was silent on the tax slabs and revenue secretary Sunil Mitra had said that those given in the first draft were only for the sake of illustrations.
In the first draft of the DTC, the government had been soft on taxes on the income of an individual. It had proposed 10 per cent tax on income of Rs 1.6 lakh-Rs 10 lakh, 20 per cent on Rs 10 lakh-Rs 25 lakh and 30 per cent beyond Rs 25 lakh in a year. It has also raised the limit of investments for tax savings to Rs 3 lakh from the current Rs 1.20 lakh per annum.
But the catch in that draft was that all the withdrawals from any tax saving instrument was to be taxed, be it provident funds, pension schemes, insurance or mutual funds. However, this proposal to tax withdrawals of tax saving instruments faced opposition from trade unions and other sections.