New Delhi: A high-level tax force set up by the government has recommended 10 per cent tax rate for those earning between Rs 5 lakh and Rs 10 lakh.
According to recommendations, the task force on direct taxes has proposed radical changes in personal income tax slabs, News18 reported.
The proposals include lowering the personal income tax for those earning between Rs 10 and Rs 20 lakh per year to 20 per cent.
The current tax slab rates are 5 per cent for income between Rs 2.5-5 lakh, 20 per cent for income between Rs 5-10 lakh and 30 per cent for income above Rs 10 lakh.
The panel has recommended no income up to Rs 2.5 lakh, rebate from income tax for income up to Rs 5 lakh, 10 per cent for income between Rs 2.5 lakh-10 lakh, 20 per cent for income between Rs 10 lakh-20 lakh, 30 per cent for income between Rs 20 lakh-2 crore and 35 per cent for income above Rs 2 crore.
"The new rate of 35 percent for those with Rs 2crore and above income will also reduce effective rate for high net-worth individuals," News18 quotes its sources.
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 then interim finance minister Piyush Goyal, according to sources. This effectively means that those with an income of up to Rs 5 lakh will be charged zero tax, News18 reported.
The panel was constituted by the government and was led by Central Board of Direct Taxes member Akhilesh Ranjan. The panel submitted its report to Finance Minister Nirmala Sitharaman on August 19 but it has not been disclosed in the public domain.
The tax slab rates have been proposed to boost consumption by putting more money in the pockets of middle-income group.
The task force was made to replace the 58-year-old Income Tax Act. The new act endeavoured to simplify income tax provisions and improving tax certainty.
The new act also repeals dividend distribution tax and minimum alternate tax. The report also speaks negative of surcharges and they should be made temporary in nature.
