According to sources a government constituted Direct Tax Code task force, headed by CBDT member Akilesh Ranjan, is arguing for a new tax regime for individuals and it has proposed dramatic changes to the Income Tax Act, which dates back 58 years. Meanwhile people earning between Rs 5 lakh and Rs 10 lakh per year may have to pay 10% income tax, if the recommendations of this high level tax force are accepted.
Reports have learnt that radical changes in personal income tax slabs have been proposed. Furthermore these include lowering the personal income tax for those earning between Rs 10 to Rs 20 lakh per year to 20 per cent. Presently personal income is taxed at 5 per cent for income between Rs 2.5 and Rs 5 lakh, at 20 per cent for income between Rs 5 lakh and Rs 10 lakh, and 30 per cent for an income of over Rs 10 lakh.
Moreover sources close to developments have revealed 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, against the prevailing structure of 5 per cent, 20 per cent and 30 per cent. Perhaps 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. Hence the rationalization 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.
