The provisions of the Finance Bill, 2011 relating to direct taxes seek to amend the Income-tax Act, 1961, inter alia, in order to,-
(i) increase the basic exemption limit in the case of individual taxpayers;
(ii) lower the qualifying age of senior citizens from 65 years to 60 years and also to increase the current exemption limit in such cases;
(iii) provide a higher exemption limit to very senior citizens above the age of 80 years;
(iv) reduce the surcharge on tax in the case of companies;
(v) provide impetus to overseas borrowings by facilitating setting up of infrastructure debt funds;
(vi) rationalise the taxation of income distributed by debt mutual funds;
(vii) levy Minimum Alternate Tax (MAT) on developers of SEZ and units operating in them;
(viii) levy Alternate Minimum Tax (AMT) in the case of Limited Liability Partnerships;
(ix) provide a set of counter-measures in relation to jurisdictions with which there is a lack of effective exchange of information;
(x) provide a concessional rate of tax on dividends received by Indian companies from their foreign subsidiaries during 2011-12.
2. The Finance Bill, 2011 seeks to prescribe the rates of income-tax on incomes liable to tax for the assessment year
2011-12; the rates at which tax will be deductible at source during the financial year 2011-12 from interest (including interest on securities), winnings from lotteries or crossword puzzles, winnings from horse races, card games and other categories of income liable to deduction or collection of tax at source under the Income-tax Act; rates for computation of “advance tax”; deduction of income-tax from, or payment of tax on, “Salaries”, and charging of income-tax on current incomes in certain cases for the financial year 2011-12.
3. Subject to certain exceptions, which have been indicated while dealing with the relevant provisions, changes in the provisions of the tax laws are ordinarily proposed to be prospective in their operation.
4. The substance of the main provisions of the Bill relating to direct taxes is explained in the following paragraphs.