The proposed Direct Taxes Code (DTC), How it will affect Investment options

The proposed Direct Taxes Code (DTC) has finally been introduced in Parliament, to be effective from April 2012 instead of April 2011 as originally intended.

Tax Treatments on Savings Options:


Investment options which comes under EEE (that is Exempt-Exempt-Exempt):
Under the EEE mode, the tax exemption is enjoyed at all the three stages - investment, accumulation and withdrawal.

Deductible from total income subject to overall limit of Rs.1,00,000/-, the investment options are:


1. Government Provident Fund (GPF)
2. Public Provident Fund (PPF)
3. Recognised Provident Funds (RPF)
4. Pension Scheme of Pension Fund Regulatory and Development Authority
          ( who were recruited since   January 2004, under EEE treatment)
5. Life Insurance Products: (Overall limit of ` 50,000 includes payment of life insurance premium, health insurance premium and tuition fees.)


Income from House Property:
Exemption of interest up to Rs 1.5 lakh on housing loan retained. Deduction to be considered only on the interest component and not the principal amount.

Capital gains
Capital gains arising on account of transfer of equity shares or units of an equity oriented fund held for more than one year will be computed after allowing a deduction at a specific percentage of capital gains without any indexation.

No distinction between Long term and short term Capital gain. Capital gains to be treated as “income from ordinary sources”, and taxed at applicable rates.