Direct Tax Code for 2011

The government has unveiled discussion paper on the new revised Direct Tax Code for 2011 on Tuesday. This Direct Tax code is an effort to only the tax-life of an individual. To replace the old Indian Income Tax Act of 1961, Government of India has proposed a new Direct Tax code or Direct Taxes Code. In the corporate as well as personal income tax calculation and planning, the new Direct Tax Code is expected to make a lot of changes. If “Direct Tax Code” comes into existence year 2011, then there is going to be some really big changes in Taxation laws. Some big changes are proposed in the Draft, if they applied, then the change will be the biggest ever change in Tax laws and will effect people in a big way. A new draft direct tax code, which is a document containing changes in Exemptions, Tax slab, has been released by the Finance Ministry. This will be a big change to four-decades old Income Tax Act.

According to the proposal, the new tax slab would be:

0% : Less than 1.6 lacs
10% : 1.6 – 10 Lacs
20% : 10 – 25 Lacs
30% : 25+ Lacs

Due to majority of people taxable income is below 10 Lacs, almost 98% of Indians will pay 10% or less tax that’s sounds really amazing. “The indicative tax slabs and tax rates and monetary limits for exemption and deductions proposed in the direct tax code will be calibrated while finalizing the legislation,” according to the discussion paper on the new Direct Tax Code for 2011. The way Direct Taxes Code works is that the income tax slabs are increased, but several deductions (e.g. deduction on housing loan) and tax-breaks are taken away.

Income Tax rates or Tax Slabs under Direct Tax Code : Table

Direct Tax Code slabs, 2011-2012, Men

Direct Tax Code slabs 2011-2012, Women

Direct Tax Code slabs 2011-2012, Senior Citizen

Video of Your World at 10: Direct Tax Code 2.0 from youtube: