New Delhi, Aug. 28 (IANS): A government constituted Direct Tax Code task force, headed by CBDT member Akilesh Ranjan, is arguing for a new tax regime for individuals. It has proposed dramatic changes to the Income Tax Act, which dates back 58 years.
People earning between INR 5 lakh and INR 10 lakh per year may have to pay 10 per cent income tax, if the recommendations of this high-level tax force are accepted.
IANS has learnt that radical changes in personal income tax slabs have been proposed. These include lowering the personal income tax for those earning between INR 10 to INR 20 lakh per year to 20 per cent.
Currently, personal income is taxed at 5 per cent for income between INR 2.5 and INR 5 lakh, at 20 per cent for income between INR 5 lakh and INR 10 lakh, and 30 per cent for an income of over INR 10 lakh.
Sources close to developments have revealed that the task force has recommended five tax brackets of 5 per cent, 10 per cent, 20 per cent, 30 per cent and 35 per cent, against the prevailing structure of 5 per cent, 20 per cent and 30 per cent.
Those earning an annual income up to INR 5 lakh, however, will get a rebate on the taxes paid, as was announced in the interim budget of 2019 by interim Finance Minister Piyush Goyal. This effectively means that those with an income of up to INR 5 lakh will be charged zero tax. The report was submitted to Finance Minister Nirmala Sitharaman on August 19, but it has not been made public yet.
The rationalisation in tax slabs has been proposed to boost consumption and revive the economy by putting more money in the pockets of the middle income group.
