According to the Parliamentary Committee Report on the Direct Tax Code (DTC) headed by Yashwant Sinha, the total number of individual taxpayers (2010-11) that earned more than Rs. 20 lakhs (Rs. 2 million, or $40,000) a year were just 406,000. That is our 1%, as the total taxpayer base is around 3.25 cr. (32.5 million).
Dhirendra Kumar at Value Research expresses his concern about the delay – the second such one if the news is true – saying it causes unnecessary uncertainty for the regular classes:
The Direct Tax Code has no DDT for debt or non-equity funds. Currently, for liquid funds, dividends are taxed at 25% plus the surcharge and cess, which adds up to nearly 28.5%. (Which I argue is still better than a fixed deposit)
So what’s the catch? Dividends will be taxed for non-equity funds, as if they are your income. […]
Thanks very much for all your comments on the earlier post about the Direct Tax Code keeping equity gains tax free till Mar 2011. I’d then asked if losses would be grandfathered – i.e. should we book them before and carry them over. Reader Sirka Pyaaz says:
If you held a share for more than one year and sell it in the open market, the capital gains are exempt. […]
Equity investors should remain invested despite the new direct tax code proposing the return of the long term capital gains tax. At least that’s what the government wants investors to believe, finance ministry officials have told NDTV.
Investors holding long term shares till March 31, 2011, will not be subjected to the long-term capital gains […]