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How the DTC will affect you?

The Direct Taxes Code (DTC) is said to replace the existing Indian Income Tax Act, 1961. If approved, the DTC shall come into force on the April 1, 2012, and shall be applicable for income earned during the financial year 2012-13. Although below expectations, experts see proposals as largely positive.

Here are a few highlights of the Direct Taxes Code

- Common threshold Income Tax exemption limit for men and women proposed at Rs. 2 lakh per annum (proposed), up from Rs. 1.8 lakh
- 10 per cent tax on annual income between Rs. 2-5 lakh, 20 per cent on between Rs. 5-10 lakh, 30 per cent for above Rs. 10 lakh
- Tax burden at highest level will come down by Rs. 41,040 annually
- Proposal to raise tax exemption for senior citizens to Rs. 2.5 lakh from Rs. 2.4 lakh currently.(NOTE:- Union budget 2011-12 already has proposed it.)
- Corporate Tax to remain at 30 per cent but without surcharge and cess.
- MAT to be 20 per cent of book profit, up from 18.5 per cent.
- Proposal to levy dividend distribution tax at 15 per cent.
- Exemption for investment in approved funds and insurance schemes proposed at Rs. 1.5 lakh annually, against Rs. 1.2 lakh currently
- Proposed bill has 319 sections and 22 schedules against 298 sections and 14 schedules in existing IT Act.
- Once enacted, DTC will replace archaic Income Tax Act.
- However, many provisions in Income Tax Act will be a part of DTC as well.
- FBT will be charged to the employee rather than the employer.

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