The revised draft of the Direct Taxes Code Bill has retained the income tax exemption limit at Rs 2 lakh and introduced a fourth slab of 35 percent on super-rich with income exceeding Rs 10 crore.
The fresh draft of the DTC Bill, posted on the website of the Finance Ministry today, has lowered the age for tax exemption for senior citizens to 60 years from 65 years.
The final view on the draft, which has been prepared by Finance Minister P Chidambaram, will be taken by the new government to be formed after the general elections are over in mid-May.
In another significant step, the draft has suggested that foreign companies with more than 20 per cent assets in India will be subjected to domestic tax laws.
The ministry has rejected the recommendations of the Standing Committee on Finance, headed by senior BJP leader Yashwant Sinha, to raise the income tax exemption limit to Rs 3 lakh and to adjust other slabs saying that it will lead to an annual loss of Rs 60,000 crore to the exchequer.
The Committee had proposed no tax on income of up to Rs 3 lakh per annum; 10 per cent for Rs 3-10 lakh; 20 per cent, for Rs 10-20 lakh and 30 per cent on annual income beyond Rs 20 lakh.
"The recommendation is not acceptable as it will result in huge revenue loss. The total revenue loss on account of recommended changes in PIT slabs and removal of cess works out to Rs 60,000 crore approximately," said the revised Direct Taxes Code Bill - 2013.
As per the current structure, there is no tax on income of up to Rs 2 lakh per annum; 10 per cent on Rs 2-5 lakh; 20 per cent on Rs 5-10 lakh and 30 per cent on income beyond Rs 10 lakh.
Although the revised DTC draft was to be taken up by the Cabinet in August 2013, it did not come up for discussion because of differences over introducing a fourth slab for the super-rich.
"With a view to maintaining overall progessivity in levy of income tax, the revised Code provides for a fourth slab for individuals, HUFs and artificial judicial persons. In their case if the total income exceeds Rs 10 crore, it is proposed to be taxed at the rate of 35 per cent," the draft said.
The DTC Bill, which aims to replace the existing I-T Act 1961 and overhaul