Bonanza for tax payers in new tax regime: Report
Good news for the middle class. The government would stick to the lower tax slabs proposed in the original draft of the Direct Tax Code, letting the salaried class spend and save more, a newspaper said Friday.
New Delhi: Good news for the middle class. The government would stick to the lower tax slabs proposed in the original draft of the Direct Tax Code, letting the salaried class spend and save more, a newspaper said Friday.
The first draft of the DTC, released in August 2009, had proposed to tax incomes up to Rs 10 lakh per annum at 10 percent, above Rs 10 lakh and up to Rs 25 lakh at 20 percent and beyond Rs 25 lakh at 30 percent.
If the government stick to these proposals, that will lead to the implementation of a moderate tax regime in the country.
There were apprehensions that the slabs would be altered as the government would implement the new tax code.
Finance Minister Pranab Mukherjee told the newspaper that any loss on account of concessions granted in the revised draft of the DTC would be made up through better tax compliance rather than holding them as reasons for raising the tax rates.
The salaried class is currently paying 10 percent tax on incomes up to Rs 5 lakh, 20 percent between Rs 5 lakh and Rs 8 lakh and 30 percent beyond that income level.
However, Mukherjee did not explicitly spell out what the new tax slabs would be.
"In the past whenever we have reduced the taxes, we have better compliance,” the minister was quoted as saying.
The FM said despite recession, the 2009-10 collection was more than the budget target. "We had set a budget target of 3.75 lakh crore and we managed to collect Rs 3.78 lakh crore," he added. "This was despite the fact that we had to make refunds of Rs 57,000 crore."
The government will bring a bill on DTC before Parliament in the Monsoon session after entertaining suggestions on the revised draft till June 30. Once passed by Parliament, the Act based on the new tax code will replace the 1961 Income Tax Act and will be implemented from April 1, 2011.