Hyderabad: Giving a breather to taxpayers, the task force on tax has recommended 10 per cent tax on the income in the range of Rs 5-10 lakh while mooting new slabs. However, this is still subject to the approval of Prime Minister Narendra Modi-led NDA government. The Central government is concerned over the falling revenues amid the economic slowdown.
According to reports, the task force has recommended five tax brackets of five 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.
CBDT member Akilesh Ranjan-headed Direct Tax Code task force has recommended a new tax regime for salaried people. It has proposed dramatic changes to the 58-year-old Income Tax Act.
According to the latest proposal by the tax task force, salaried people with earnings between Rs. 5 lakh to Rs. 10 lakh per year may have to pay 10 per cent income tax (I-T). In addition to this, the tax task force has also made a proposal of 20 per cent tax on earnings between Rs.10 to Rs. 20 lakhs.
The existing income tax is five per cent on earnings between Rs 2.5lakh to Rs. 5 lakh and 30 per cent for an income of over Rs. 10 lakh.
Those earning an annual income up to Rs. 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 Rs. 5 lakh will be charged zero tax.
The task force submitted its report to Union Finance Minister Nirmala Sitharaman on August 19, but it has not been made public yet. According to sources, the panel has recommended that income tax for those earning above Rs. 20 lakh till Rs. 2 crores, continue to remain at the previous rate of 30 per cent.
The committee has reportedly proposed introducing a new top tax bracket of 35 per cent for the super-rich, that is those earning above Rs. 2 crore per year, and doing away with the surcharge.
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. The panel has also recommended removal of dividend distribution tax and scrapping the minimum alternate tax. Further, it wants the government to avoid levying surcharges.