Updates on Direct Tax Code for 2011 by Pranab Mukherjee

Earlier in 2009, Indian Government proposed a new tax code for year 2011. In this proposed tax code, government indicated radical tax reforms to simplify taxation. To make it robust and accepted by citizens, this draft was open for public suggestions. Now on June 15th 2010, government released its revised version of proposed Direct Tax Code (DTC).

The major change that came is that tax on provident fund and life insurance products are to be treated on Exempt-Exempt-Exempt (EEE) basis instead of EET (Exempt-Exempt-Tax). Another major decision is for ULIPs. From the year 2011, new ULIPs will not have EEE benefit but existing ULIPs will continue to get EEE benefit. Further, there will be no capital gains on savings schemes.