Features of Kelkar’s recommendation’s on Direct Taxes include:
  • No taxing of income up to Rs 1 lakh.

  • 20% tax for Rs 1 lakh - Rs 4 lakh.

  • 30% tax for Rs 4 lakh and above.

  • Wealth tax to be scrapped.

  • Farm income to be taxed.

  • Reduce corporate tax to 30% from 36.75% & scrap all exemptions.

  • For foreign companies, reduce tax to 35% from 40%.

  • Corporates to pay income-tax on the profits declared to shareholders.

  • Restrict depreciation allowance under Sec 32 of the I-Tax Act to the allowance charged to the profit and loss account.

  • Scrap of Minimum Alternate Tax (MAT) and exempt long-terms capital gains on equity.
    • For NRI
  • The panel has recommended deletion of the `Not Ordinarily Resident` clause in the Income-tax Act.

  • Accordingly, a person who returns to India after two years and stays here for over 182 days will have to pay tax not only on the income generated in India but also on the income generated abroad.

  • His assets outside India could also become taxable.