india tax: New Direct Tax Code of India Offered to Public

The new Direct Tax Code of India is offered to Indians for discussion. The new Direct Tax Code will likely be in force in 2011 April. The new code brings some changes as shown below:

- A residence certificate is needed for tax treaty claims
- 'Assessment year' and 'previous year' approach abolished
- Securities Transaction Tax will be abolished
- 'Resident but not ordinarily Resident' approach abolished
- If there is no applicable tax treaty, no credit for tax paid overseas
- Changes in income tax brackets
- Net wealth above 500 Million Rupees will be subject to wealth tax at a tax rate of 0.25%
- Tax filing date for an individual who doesn't have a business income is now June 30.
- Education Cess abolished
- Surcharge abolished


Current rate of education cess in India is 3%, making the maximum tax rate 30.90%. Since the new tax code abolishes the education cess, the maximum rate for income tax will be 30%. Basic tax exemption threshold remains the same, at 160,000 Rupees. The basic exemption amount is 190,000 Rupees for females and 240,000 Rupees for seniors.

Tax rates suggested in the new Direct Tax Code are as follows:

Taxable Income (Indian Rupees)  /  Tax Rate on the Slab
Up to INR 160,000                                 Exempt
INR 160,001 - 1,000,000                          10%
INR 1,000,001 - 2,500,000                       20%
Above INR 2,500,000                               30%


Read more about India Tax.