At first sight the revised proposals under DTC give an impression that exemptions are back where they were. But a closer look at the details reveals that there is a twist in the tale. While it has brought cheer to investors, but financial advisors say other proposals in the revised Direct Tax Code (DTC) could pose some serious problems.

The DTC draft notes ‘‘approved pure life insurance products and annuity schemes will also be subject to EEE (exempt, exempt, exempt) method of tax treatment.” But it does not specifically mention ULIPs. So, does it mean that unit-linked insurance plans (ULIPs) won’t enjoy the same tax-free status on maturity anymore?

Read on as we analyse the impact of revise Direct Tax Code on Retirement benefits, House property income,Draft Provisions of DTC: DTC has proposed to do away with the exemption available in respect of gratuity (exempt up to Rs 10 lakh in specified cases, fully exempt for government employees).

Any amount withdrawn, including from RBA (which is not grand-fathered) would be taxed. Revised Discussion Paper (‘RDP’): It is proposed to provide exemption in respect of gratuity received, subject to monetary limits.

Beneficial: The recipient will be able to utilise the gratuity amount immediately and the tax burden (if any) would also reduce substantially. The government is expected to continue the current exemption limit of Rs 10 lakh.

India Times