New Delhi, June 16: The revised draft Direct Taxes Code (DTC) proposes tax exemption on retirement benefits, the Public Provident Fund (PPF), the Government Provident Fund (GPF), the Recognised Provident Funds and the Employees Provident Fund and addresses important issues such as Minimum Alternate Tax (MAT).
It also takes care of taxation of long-term savings, capital gains and housing loans.
Releasing the revised DTC draft here on Tuesday, Revenue Secretary Sunil Mitra said provident funds would not be taxed on withdrawal.
Also, a proposal to levy MAT on corporates based on their assets had been dropped. However, the DTC did not give any details on the Income-Tax structure such as the slabs or rates, which were provided in the first draft released in August 2009.
“As of now, it is proposed to provide the EEE [exempt-exempt-exempt] method of taxation for GPF, PPF, the Employees Provident Fund and Recognised Provident Funds,” it said.
The Revenue Secretary said taxation rates in the first draft — which suggested 10 per cent tax on income from Rs.1.60 lakh to Rs.10 lakh and 20 per cent on income between Rs.10 lakh and Rs.25 lakh and 30 per cent for the income beyond that were illustrative. The rates would be made known only in the proposed Act.
The revised draft puts pensions administered by the interim regulator, the Pension Fund Regulatory and Development Authority, including pension of government employees who were recruited since January 2004, under the EEE treatment. The first DTC draft had proposed to tax all savings schemes, bringing them under the EET mode.
The revised draft, on which the government has invited comments from stakeholders till June 30, also dropped the proposal to impose MAT on gross assets, a move which too was opposed by industry.
MAT paid by eligible companies are to be computed on profits and not on assets. Similarly, retirement funds continue to be exempt from tax on withdrawal. The draft Bill would be introduced in the monsoon session of Parliament.
–Agencies–