Parl panel to mull DTC, may seek hike in I-T exemption

A Parliamentary panel will meet tomorrow to discuss the report on the Direct Taxes Code (DTC) Bill, understood to have favoured raising I-T exemption limit to Rs 3 lakh.

"The Standing Committee on Finance will meet tomorrow to discuss the the full report on the DTC Bill," sources said.

Last week the meeting of the Committee chaired by senior BJP leader Yashwant Sinha considered the draft of the report on the proposed Bill. But the committee postponed the adoption of the report as certain issues were yet to be resolved.

It is widely expected that the Standing Committee will submit its report before the Budget session of Parliament beginning March 12.

The committee, according to sources, wants the government to raise the income tax exemption limit to Rs 3 lakh in view of the near double-digit inflation which has eroded purchasing power of rupee. The Bill has a provision to raise the limit to Rs 2 lakh.

Currently, income of Rs 1.80-5 lakh attracts 10% income tax, Rs 5-8 lakh 20% and above Rs 8 lakh 30%.

Finance Minister Pranab Mukherjee had tabled the DTC Bill in Lok Sabha in August 2010 and was referred to the Standing Committee for scrutiny.

The draft report, prepared by the Committee, has also suggested categorisation of the home and commercial property for the purpose of income tax. The income from these two sources should be accorded different tax treatment, it said.

It wants the government to incorporate provisions to prevent misuse of the facilities and tax relief provided to People of Indian Origin (PIOs).

The DTC, which seeks to modernise the direct taxation system, will replace the Income Tax Act, 1961. Centre had planned to introduce the DTC from April 1, 2012.