FinMin against raising Income Tax exemption limit to Rs 3 lakh

The Finance Ministry has rejected the recommendation of the Parliamentary Standing Committee headed by former Finance Minister Yashwant Sinha on raising the income tax exemption limit to Rs 3 lakh. The recommendation was made as part of the Committee’s report on the Direct Tax Code (DTC). Adjusting the slabs will cause tax revenue losses to the tune of Rs 60,000 crore a year to the exchequer, the Ministry has said.

It has, however, agreed to the recommendation on reducing the age for tax exemption for senior citizens from 65 years to 60 years. The Ministry has also rejected the recommendation on inflation-proofing the tax exemption.

The Finance Ministry released the proposed Direct Taxes Code - 2013 on Tuesday. Of the 190 recommendations made by the Committee, the Finance Ministry has accepted 153 either wholly or with partial modifications. In his Budget speech in February, Union Finance Minister P. Chidambaram had said that the government will seek public opinion on the revised DTC.

Earlier, the UPA Government had introduced the DTC Bill in the Lok Sabha in 2010 and later referred to the Committee. The revised DTC Bill will now be re-introduced in Parliament by the next Finance Minister post-elections.

The Parliamentary Committee had proposed no tax on income of up to Rs 3 lakh per annum; at the rate of 10 percent for Rs 3-10 lakh; 20 percent, for Rs 10-20 lakh and 30 percent on annual income beyond Rs 20 lakh. At percent, there is no tax on income of up to Rs 2 lakh per annum. Income of Rs 2-5 lakh attracts tax at the rate of 10 percent, 20 per cent on Rs 5-10 lakh and 30 per cent on income beyond Rs 10 lakh.

The revised DTC provides for a fourth slab for individuals, HUFs and artificial judicial persons with a view to maintaining overall progressivity in the levy of income tax. If their total income exceeds Rs 10 crore, it is proposed to be taxed at the rate of 35 percent under the revised DTC.

The revised DTC also said the income from a house property, which is not used for business or commercial purposes, will be taxed under the head ‘income from house property’.

The recommendations accepted include those pertaining to simplifying the structure and the content of the DTC for making it more user-friendly and at the same time “ensuring tax buoyancy by tapping high capacity/income and evasion prone segments”.

The recommendations ministry has rejected include the one on retaining the rate of taxation for life insurance companies at 15 percent against the proposed 30 percent and abolishing the Securities Transaction Tax (STT).

The Ministry has said that the revised DTC captures all assets for Wealth Tax, whether physical or financial, thereby removing the discrimination for taxation purposes against “conservative” taxpayers who invest their savings in physical assets.

The rate for the Wealth Tax is proposed (for individuals, HUFs and private discretionary trusts) at 0.25 percent. The threshold for the levy of in the case of individual and HUF is proposed at Rs 50 crores.

The draft Code also does away with the Settlement Commission as it has “not achieved the intended purpose of early settlement of cases and additional revenue realisation”.

The DTC Bill, 2010 had provided for a 50 percent threshold of global assets to be located in India for taxation. “This threshold is too high. There could be a situation that a company has 33.33 per cent assets in three countries but it will not get taxed anywhere.

Accordingly, the revised Code provides for a threshold of 20 per cent of global assets to be located in India for taxation...” it said.

Jayesh Sanghvi, National Leader - International Tax Services, EY says, “The proposed revisions relating to the onus of proof with regard to GAAR, transition provisions with repect to tax losses and MAT credit are welcome but the one on relaxing small shareholdings from the net of indirect transfers and the reduction of the threshold from 50 percent to 20 percent for substantial value may continue to some uncertainties”.

Source:http://www.thehindu.com/business/Economy/finmin-against-raising-it-exemption-limit-to-rs-3-lakh/article5858989.ece

INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2013-14 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.

CIRCULAR NO : 08 /2013 

F.No. 275/192/2013-IT(B) 

Government of India 

Ministry of Finance 

Department of Revenue 

Central Board of Direct Taxes 

 New Delhi, dated the 10th October, 2013 

SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2013-14 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961. 

Reference is invited to Circular No.08/2012 dated 05.10.2012 whereby the rates of deduction of income-tax from the payment of income under the head "Salaries" under Section 192 of the Income-tax Act, 1961(hereinafter ‘the Act’), during the financial year  2012-2013, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head "Salaries" during the financial year 2013-2014 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules). The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- www.incometaxindia.gov.in. 

2. RATES OF INCOME-TAX AS PER FINANCE ACT, 2013: 

As per the Finance Act, 2013, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head "Salaries" for the financial year 2013-14 (i.e. Assessment Year 2014-15) at the following rates: 

To view the order click here....

EXEMPTION FROM FILING ITR (INCOME TAX RETURN) NOT EXTENDED THIS ASSESSMENT YEAR 2013-14 – CBDT.

       Income Tax Department issues press release to clarify that unlike previous year Salaried Employees with Total Income up to Rs.5 lakhs too have to file ITR (Income Tax Return) this year viz., Assessment year 2013-14.

       The full text of Press Release issued by CBDT (Central Board of Direct Tax) is as follows:

       The CBDT has, vide notification dated 1-05-2013, made E-filing of Return compulsory for Assessment Year 2013-14 for persons having total assessable income exceeding Five lakh rupees.

       The CBDT vide its earlier notifications had exempted salaried employees having total income up to Rs. 5 lakhs including income from other sources up to Rs. 10,000/- from the requirement of filing return of income for assessment year 2011-12 and 2012-13 respectively. The exemption was available only for the assessment year 2011-12 and 2012-13. The exemption was giving considering ‘paper filing of returns’ and their ‘processing through manual entry’ on system.

Special IT Return Receipt Counters for Salaried Tax Payers With Income Upto Rs. 5 Lakh.

      The CBDT has, vide notification dated 1-05-2013, made E-filing of Return compulsory for Assessment Year 2013-14 for persons having total assessable income exceeding Five lakh rupees.
 
           The CBDT vide its earlier notifications had exempted salaried employees having total income upto Rs. 5 lakhs including income from other sources upto Rs. 10,000/- from the requirement of filing return of income for assessment year 2011-12 and 2012-13 respectively. The exemption was available only for the assessment year 2011-12 and 2012-13. The exemption was giving considering ‘paper filing of returns’ and their ‘processing through manual entry’ on system.
 
           However, this year the facility for online filing of returns has been made user-friendly with the advantage of pre-filled return forms. These E-filed forms also get electronically processed at the central processing centre in a speedy manner. Hence, the exemption provided during the last two years is not being extended for assessment year 2013-14. Taxpayers are encouraged to file their returns electronically. E-filing is an easy, fast and secure method of filing of income tax return. Moreover, Digital signature is not mandatory for these taxpayers and they can transmit the data in the return electronically by downloading ITRs, or by online filing and thereafter submit the verification of the return in From ITR-V acknowledgement after signature to Central Processing Centre. The processing for E-filed returns is faster.

Additional Manpower for the Income Tax Department.

F.No.A-11013/1/2013-Ad VII
Government of India/Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

New Delhi, 31st May, 2013

All the Chief Commissioners of Income-tax
All the Directors General of Income-tax

Subject :- Additional Manpower for the Income Tax Department

Sir/Madam,

   I am directed to state that the Government has approved, as per decision taken In Cabinet Meeting held on 23rd May, 2013 (Minutes issued on 27th May, 2013), additional manpower for the Income Tax Department in various cadres as per Annex A of this communication. These posts are created in addition to the existing posts as per restructuring of the Department vide F.No.A-11013/3/98.Ad.VII dated 24th October, 2000 and 7051 additional posts created vide order F.No.A-11013/3/2006-Ad.VII dated 20.11,2006.

   2. All the additional posts at different levels as per Annex A stand created with effect from 23rd May, 2013 (the date of the Cabinet Meeting). These posts shall be filled up in accordance with the Cabinet approval in the following manner:-

   i. The 166 additional regular posts and 620 additional reserve posts at the level of Assistant Commissioner of Income Tax and 563 vacancies arising in this grade due to promotions to higher grade will be filled up equally by promotion and direct recruitment. Therefore the additional 1349 posts created at this level will be filled over a period of 5 years with 270 posts per year being filled in the next four years and 269 posts being filled In the fifth year. Every year these posts will be filled by promotion and by direct recruitment in equal proportion.

   ii. The Cabinet has permitted, as a one-time measure, filling up of the additional posts that are to be filled by promotion immediately, without awaiting amendments in the recruitment rules on the basis of the model recruitment rules issued by DOPT. Accordingly, the process of filling up of all the additional posts that are to be filled by promotion shall be initiated immediately on the basis of the model recruitment rules issued by the DoPT without awaiting amendment in the recruitment rules of the relevant post(s).

   iii. The Cabinet has also approved the filling up of the additional posts in the HAG+ with all the existing CCs IT being placed in the HAG+ directly and thereafter a DPC being conducted to place 26 of these CCs IT in the Apex grade. Instructions regarding promotions/placements of the officers in the posts in HAG+ and Apex scales shall be issued separately.

   3. The region-wise / charge-wise distribution of the posts at various levels will be intimated separately. Revised sanctioned strength will be notified In the recruitment rules In due course.

   4. This issues in pursuance to the approval of the Cabinet conveyed vide Cabinet Secretariat Note No. 20/CM/2013 (I) dated the May 27th 2013.

Yours sincerely,

Sd/-
(S.K.Lohani)
Joint Secretary to the Government of India

More Details Click here....

Budget 2013: 7 expectations of the salaried class.

   According to a survey by Assocham, a majority of salaried people want Finance Minister P. Chidambaram to raise the exemption limit on income-tax and increase deductions under various allowances so that they are left with more purchasing power.

   1. Exemption limit on income-tax: Over 89 per cent of the respondents said that the slab oftax free income has not moved up in line with real inflation. The current basic exemption limit of Rs. 2 lakh should be increased to at least Rs. 3 lakh, while the limit for women should go up to Rs. 3.5 lakh. This will increase the purchasing power of individuals and stimulate demand.

   2. Medical re-imbursement limit: With increasing healthcare costs, the existing tax free limit of Rs. 15,000 should be increased to Rs. 50,000, 89 per cent of the respondents said.

   3. Transportation allowance: Currently, this is tax-free to the extent of Rs. 800 per month. This limit was fixed more than a decade ago, and definitely needs to be revised upwards to at least Rs. 3,000 per month, given the rising commuting costs across the country, according to the survey.

   4. Interest on home loan: The deduction limit for payment of interest (on self-occupied property) has remained constant at Rs. 1.5 lakh since 2001. Since then, property prices have gone through the roof, increasing the quantum of home loan. An increase in the exemption limit to Rs. 2.5 lakh will be a welcome change, the survey found.

   5. Investments under Section 80C: This IT Act provides a deduction of Rs. 1 lakh for certain investments. The provision helps people in making forced savings that helps them in the future. A common man expects this limit to be increased to Rs. 2 lakh with a sub-limit of Rs. 50,000 exclusively for insurance and pension.

   6. Infrastructure bonds: Over 82 per cent respondents favoured the restoration of infrastructure bonds, considering that the government needs massive funds for the development of the infrastructure sector and also the lock-in period should be restricted to five years.

   7. Pension: Over 71 per cent of the respondents demanded that the national pension system (NPS) be brought under the EEE (exempt-exempt-exempt) as against EET (exempt-exempt-tax) at present. This means that investors get a tax exemption at all the three stages of investment, appreciation and withdrawal.

Source: http://profit.ndtv.com/news/cheat-sheet/article-budget-2013-7-expectations-from-the-salaried-class-318209

Raise I-T exemption limit to Rs 4 lakh: Congress.

   In a pre-budget meeting with Finance Minister P Chidambaram here on Thursday, Congress leaders have asked the UPA government to increase the taxable income exemption limit to Rs 4 lakh from the current Rs 2 lakh, while suggesting a pro-people budget with sops for the middle class and farmers keeping  the upcoming elections in mind.

   The meeting was held at the Congress party headquarters. With the rise in fuel prices impacting the ‘aam aadmi’, the meeting saw suggestions for varied pricing of petrol, diesel and cooking gas for people living below poverty line and low income group.

   Senior party leader Oscar Fernandes suggested there was a need to bring down the dependence on petroleum import and more focus on having alternative sources of energy like ethanol, sources said. Fernandes also wanted the government to reduce tax on bidis, noting that employment levels were coming down in the labour-intensive sector due to current tax slab.

   Congress leader Jagdish Tytler suggested that the budget should be formulated in a way that helps the party to connect with people as elections were ahead, sources said.  AICC Secretary P Sudhakar Reddy mooted raising the tax exemption limit of Rs 2 lakh to Rs 4 lakh, which was endorsed by many other office bearers.

    He also advised linking Mahatma Gandhi National Rural Employment Guarantee Scheme with agriculture to help meet the shortage of farm labour in the sector, besides offering three-year interest-free loans to small farmers for their children’s education.

   Suggestions were also made by party leaders for gender budgeting. Reddy advised the Finance Minister that female assessees could be given higher tax exemption limit.

   There were also demands by many leaders for bringing more clarity on the service tax as it was being interpreted differently in various states.

   Minority Department Chairman Imran Kidwai demanded increase in outlay of the Minority Affairs Ministry and allocation of more funds to minority institutions. He also advised formulation of special scheme for Most Backward Classes for their financial inclusion.
 
   Senior party leader Ajit Jogi complained that central funds were being diverted in many non-congress ruled states by the respective governments, suggesting some mechanism should be developed to check this, “The finance minister told us what are the difficulties and how the Indian economy was kept at a balance despite the tough global economic scenario. Thirty-two of the 46 office bearers present spoke on various issues related to farmers, weavers, education, health and income tax," party general secretary Janardan Dwivedi told reporters after the meeting.

Source: www.deccanherald.com

Govt. urges Tax Payers to disclose true income & pay Tax.

   Government Once again urges all Tax Payers to Disclose their true income and pay Appropriate Taxes within the Current Financial Year;

   Nodal Cell set up to Capture the Response and take Follow-up Action; an Online Monitoring System to Ensure Follow-up Action and Track Return Filing and Tax Payment of the Target Segment.

   The Union Finance Minister Shri P. Chidambaram has repeatedly emphasized that there is need for a non–intrusive tax administration to enable the tax payer to file his return and pay appropriate taxes.

   In the statement made by the Revenue Secretary to the media on 10th December 2012, he had stated that there is no advantage in suppressing the true income or avoiding paying income tax that is due because, sooner or later, the information available with the Income Tax Department will lead the department to the doors of such persons.

   The Directorate of Systems of the Income Tax Department has undertaken a business intelligence project to identify PAN holders who have not filed Income Tax Return and about whom specific information is available in 148 information codes of Annual Information Return (AIR), Central Information Branch (CIB) data and TDS/TCS Returns. Information in the Cash Transaction Reports (CTRs) of FIU-IND has also been included as part of this data matching exercise. This data analysis has identified target segment of 12,19,832 non-filers linked to more than 4.7 crore information records. Rule based algorithms have been used to identify high priority cases for follow-up and monitoring.

   In the first batch, letters are being sent to 35,170 PAN holders by the Directorate of Intelligence and Criminal Investigation. The letter contains the summary of the information of financial transaction(s) along with a customized response sheet and seeks to know whether the person had filed his Income Tax return or not. A Nodal cell has been set up to capture the response and take follow-up action. There will be an online monitoring system to ensure follow-up action and track return filing and tax payment of the target segment.

   The Government would once again urge all tax payers to disclose their true income and pay appropriate taxes within the current financial year.

Source:http://taxguru.in/income-tax/govt-urges-tax-payers-disclose-true-income-pay-taxes.html

Govt. to raise income tax exemption limit to Rs 3 lakh in revised DTC.

   The government will come up with a modified Direct Taxes Code (DTC) Bill after incorporating the suggestions of the Standing Committee on Finance, which among things had suggested raising annual income tax exemption limit to Rs 3 lakh.

   “Will come out with modified DTC (Bill) in response to Standing Committee suggestions,” said Advisor to the Finance Minister Parthasarathi Shome at a FICCI event here.

   He said the Finance Ministry is looking at the Bill and working on tax structures as suggested by the Parliamentary committee.

   The Parliamentary panel headed by senior BJP leader Yashwant Sinha in its report (March 2012) had suggested raising the annual income exemption tax limit to Rs 3 lakh as against Rs 2 lakh proposed in the original DTC Bill. Current tax exemption limit is Rs 1.8 lakh.

   It has also suggested that subsequent tax slabs be adjusted accordingly to provide relief to people reeling under the impact of inflation. The DTC will eventually replace the over five decades old Income Tax Act.

   “We are trying to see what could be the best in terms of transparency so that issues that are hurting industry could be covered adequately,” Shome said.

   He further said the Finance Ministry is also addressing the issue of expenditure control and that remains a major challenge.

   “We are looking into expenditure efficiency. We should do more in terms of efficiency. Issues on expenditure side is being addressed. Expenditure control is a major challenge and is being addressed by the Finance Minister,” he said.

   The DTC Bill, tabled in August 2010, was referred to the Standing Committee for scrutiny.

   Shome also said there has been some improvement on the government’s non-plan expenditure side since the time of financial crisis in 2008.

   Finance Minister P. Chidambaram had in November 2012 announced a fiscal consolidation road map wherein he plans to restrict fiscal deficit at 5.3 per cent of GDP in the current fiscal and bring it down to 3 per cent by 2016-17.

   Shome further said that the government is showing its intention to bring in clarity in tax laws and reforms in tax administration.

   “We have to increasingly do so (tax reforms). That is going to be a vehicle and we won’t put it on back burner,” Shome said.

   He also said the Ministry has asked National Institute of Public Finance and Policy (NIPFP) to calculate the impact of the proposed Goods and Services Tax (GST) on the GDP.