A recommendation has been placed before the Central government suggesting changes in the income tax slabs, proposing a reduction in the taxes for those earning between Rs 5 lakh and Rs 10 lakh to 10 per cent of the income. Currently, personal income is taxed at five per cent for those earning Rs 2.5 lakh and Rs 5 lakh, at 20 per cent for incomes in the bracket of Rs 5 lakh and Rs 10 lakh, and 30 per cent for incomes exceeding Rs 10 lakh.
After the changes, income will be taxed at 10 per cent from Rs 2.5 lakh and Rs 10 lakh; however, thanks to a tax rebate announced in the interim 2019 budget, an income up to Rs 5 lakh annually will not be taxed. The report has recommended five tax slabs—5 per cent, 10 per cent, 20 per cent, 30 per cent and 35 per cent.
There will be a 20 per cent tax on income ranging from Rs 10 lakh to Rs 20 lakh, 30 per cent on annual incomes between Rs 20 lakh and Rs 2 crore, and 35 per cent on incomes above Rs 2 crore.
A government panel on direct tax code headed by Akhilesh Ranjan tabled the report on August 19. The finance ministry will study the recommendations and make a decision.
Some of the other recommendations included in the report are: avoid surcharge as much as possible; a corporate tax of 25 per cent on all national and international companies; avoid Dividend Distribution Tax (DDT) and Minimum Alternate Tax (MAT).
(With Web Desk inputs)
