A tax panel has proposed significant changes on the Income Tax Act, which dates back 68 years. A Direct Tax Code task force headed by CBDT member Akilesh Ranjan is arguing for multiple changes in the new tax regime for individuals. If the proposal comes to force, then people earning between Rs 5 lakh and Rs 10 lakh may have to pay 10 per cent income tax instead of the current 20 per cent.
News agency IANS reported that changes also include lowering the personal income tax for individuals earning between Rs 10 lakh and Rs 20 lakh. Those earning above Rs 20 lakh till Rs 2 crore yearly will continue to pay 30 per cent tax.
The task force has, moreover, proposed introducing a new top tax bracket of 35 per cent for individuals earning above Rs 2 crore a year and doing away with the surcharge.
The report mentions 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 instead of the current structure of three brackets. Currently, personal income between Rs 2.5 lakh to Rs 5 lakh is taxed at 5 per cent, while for income between Rs 5 lakh and Rs 10 lakh and from Rs 10 lakh onwards, tax levied are 20 per cent and 30 per cent respectively.
Individuals earning an annual income of up to Rs 5 lakh will get a rebate on taxes paid, as mentioned by Interim Finance Minister Piyush Goyal in the Interim Budget 2019.
The report prepared by the task force has been submitted to Finance Minister Nirmala Sitharaman on August 19 but has not been made public, as mentioned in the IANS report.
According to the report, the rationalisation of the tax slabs has been proposed to give a boost to the economy and put more money in the middle-income group. The task force also proposed removal of dividend distribution tax and avoid levying surcharges. It also proposed scrapping the minimum alternate tax.