New Delhi: With just a week left before the Union Budget for the year 2012 is announced, the Parliamentary Standing Committee on Direct Taxes has recommended major tax reforms, including a raise in the tax exemption limit for annual income up to Rs 3 lakh. The panel has also recommended some changes in the tax rate on various income groups, ranging from 10 per cent to 30 per cent.
According to the recommendations of the committee, there must be no tax on annual income up to Rs 3 lakh while a tax of 10 per cent should be imposed on income between Rs 3 and 10 lakh per annum. The panel further recommends that a tax of 20 per cent must be levied on those earning between Rs 10 and 20 lakh every year and of 30 per cent on income above Rs 20 lakh for a year.
As of now, those earning Rs 1.8 lakh or less a year are exempt from paying income tax. A tax rate of 10 per cent applies to those earning more than Rs 1.8 lakh but less than Rs 5 lakh; 20 per cent to those making between Rs 5 lakh and Rs 8 lakh. The 30 per cent tax rate applies to those whose earnings exceed Rs 8 lakh.
The committee has further recommended higher income tax exemption for women. Last year's Budget had fixed women's exemption limit at Rs 1,90,000.
However, the panel has asked the Finance Minister to keep the corporate tax rate unchanged at 30 per cent.
The recommendations on tax reforms by the parliamentary committee, if taken into account by Union Finance Minister Pranab Mukherjee in the Union Budget 2012, may bring huge relief to tax payers.
The Budget Session of Parliament will begin on March 12 with President Pratibha Patil addressing the joint sitting of members of the Lok Sabha and the Rajya Sabha.