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POSTED BY ON March 13, 2012 1:04 pm COMMENTS (3)
Dear all
I heard with the implementation of DTC or its recommendations in Budget 2012, HRA benefit for IT exemptions will be removed.
If it is true, it will impact salaried employees a lot. This will impact even the Zero Tax Slab is increased to 3 Lakh.
If this is true, it will be a huge blow to the people staying in rented houses. They cant even get the benefit of Housing Loan. How far the Govt proposed actions are justified, while allowing tax benefit to Housing Loans and removal of HRA for IT?
Can you share your idea, How far Removal of HRA benefit will impact the Income Tax.
Regards
KK Babu
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DTC aims to make the tax rules lot simpler by eliminating the tax exempted benefits. If DTC is implemented, it will swap with Age old IT ACT of 1961.
This is how the structure looks
Tax Slab Current Tax Slab Existing DTC New Proposal-DTC
Nil upto 1.8 Lakh upto 2.0 Lakh upto 3.0 Lakh
10% 1.8 to 5.0 Lakh 2.0 – 5.0 Lakh 3.0 to 10 Lakh
20% 5.0 to 8.0 Lakh 5.0 – 10 Lakh 10.0 to 20 Lakh
30% > 8.0 Lakh >10.0 Lakh >20 Lakh
What you gain from DTC is – Tax Friendly Brackets. What you lose is – Tax exempted benefits/perks will no more be available to you. To make it more clear DTC will close all the means through which tax could have been avoided. Tax exempted allowances like HRA, LTA, Conveyance allowance; Medical, Food Coupons, Car Allowance, etc will be taken away.
thanks Mr Ashal
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KKB
Dear KKBabu, please do not worry for HRA or rather anything related to DTC, today. DTC is still merely a talk as on date & no concrete structure is there. Let parliament clear it as an act & then only we ‘ll come to know the exact structure of DTC.
Thanks
Ashal