Will government implement Direct Tax Code report on taxes?
NEW DELHI: The direct tax code report submitted by the Akhilesh Ranjan-led panel to the government has suggested that the income tax slabs be relaxed giving relief to middle-class taxpayers. However, given its state of finances, the government may find it a tough job to go ahead with implementing it in its entirety and may instead go in for cherry-picking parts of it.
The direct tax panel has suggested that 10 per cent tax on incomes between Rs 2.5 lakh to Rs 10 lakh with full tax rebate up to incomes of Rs 5 lakh, a 20 per cent tax on incomes between Rs 10 lakh and Rs 20 lakh and a 30 per cent tax on incomes between Rs 20 lakh and Rs 2 crore and a flat 35 per cent tax on incomes beyond that. This is against a current tax regime of 5 per cent tax for incomes between Rs 2.5 lakh and Rs 5 lakh, 10 per cent for incomes between Rs 5 lakh – Rs 10 lakh, 20 per cent for incomes between Rs 10 lakh – Rs 20 lakh and 30 per cent for incomes beyond Rs 20 lakh.
There is a 4 per cent cess at all tax rates and a 10 per cent surcharge on incomes between Rs 50 lakh and Rs 1 crore and a 15 per cent surcharge for incomes over Rs 1 crore, dubbed by tax-practitioners as the ‘Rich Tax’. The DTC panel also suggested removal of all surcharges and cesses on income tax, though this suggestion is unlikely to be accepted given the fact that cesses and surcharges go exclusively into the Central kitty, while taxes are divisible between Centre and states.
Officials said there would be some relaxations on tax slabs, but these may not correspond to the panel’s recommendations. Top revenue officials said the DTC recommendations, which cover a wide gamut besides tax slabs, including tax treatment of foreign investment, taxes on dividend and wealth, had been “taken into account while formulating the budget…”.