The task force on Direct Tax has recommended massive cuts in the present income tax slabs, CNBC-TV18 quoted sources as saying.
According to the report, the submission was made on August 19, 2019. The task force said income tax rates could be cut for individuals in order to boost consumption.
The report proposed a 10 percent income tax rate for individuals earning between Rs 5 lakh and 10 lakh per year. The present rate is 20 per cent.
The report also seeks to levy 30 per cent income tax slab for individuals earning over Rs 20 lakh per year. At present, individuals earning over Rs 10 lakh per year are subjected to the income tax slab of 30 per cent.
The report recommended an income tax rate of 35 per cent for a new bracket of individuals earning over Rs 2 crore a year.
Besides, dropping of surcharges and cess levied on income tax was also one of the suggestions.
Key recommendations of the task force on Direct Taxes
- The task force report on income tax recommends a major overhaul in personal income taxes
- Crucial to boost consumption and revive demand for the middle class
- The task force recommends reducing the tax percentage for people falling under Rs 5-Rs 10 lakh income group to 10% from the existing 20%.
- The task force also recommended reducing the tax liability of those falling under Rs 10 lakh to Rs 20 lakh income category to 20% from the existing 30%.
- Task force, however, proposed no hike in Rs 2.5 lakh exemption limit.
- The task force also recommends doing away with surcharges and cess.
- (Note that these are suggestions made by the task force on Direct Tax led by CBDT member Akhilesh Ranjan. Government has not taken any decision on proposals on tax reform.)
However, we would like to know what do you think of the proposals made by the task force on direct tax.
Corporate tax rate cut:
Last week, the government announced a series of tax incentives to boost the industry and restart investment. Finance Minister Nirmala Sitharaman announced a lowering of corporate tax rate on domestic companies to 22 per cent subject to each entity not availing any exemptions and incentives. These companies will also not be required to pay any Minimum Alternate Tax (MAT). Effective tax rate in this case would be 25.17 per cent, including cess and surcharge.
The Minister announced an even lower 15 per cent corporate tax rate for new domestic companies making fresh investment in manufacturing. These companies should have commenced production on or before March 31, 2023 and would also get exemption from MAT.