New Delhi, August 29: A government-appointed body, tasked to recommend suggestions for new Direct Tax Code, which seeks to replace the existing Income Tax Act, has proposed major changes in the existing income tax rates for individual taxpayers. While the body, headed CBDT member Akhilesh Ranjan, has not recommended raising of the income tax exemption limit from the current level of Rs 2.5 lakh, it proposed lowering the personal income tax for those earning between Rs 10 to Rs 20 lakh per year from 30 percent to 20 percent.

According to a report, the task force on Direct Tax Code proposed five tax slabs of 5 percent, 10 percent, 20 percent, 30 percent and 35 percent against the existing three slabs of 5 percent, 20 percent and 30 percent. It did not touch the 5 percent tax rate for those earning up to Rs 5 lakh or the current rebate of Rs 12,500. Currently, 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.

While the task force, in its report to Union Finance Minister Nirmala Sitharaman, suggested that the income tax rate for those earning above Rs 20 lakh and till Rs 2 crore, should continue to remain at the previous rate of 30 per cent, it proposed withdrawal of surcharge for the super-rich and introducing a new top tax bracket of 35 per cent for those earning above Rs 2 crore annually. Income Tax 2019 Deadline: Finance Minister Nirmala Sitharaman Gives Mantra of Restraint to Tax Collectors but Says Deadlines Are Realistic.

New Income Tax Slabs as Recommended by Task Force:

  • Up to Rs 2.5 lakh - Exempted

  • Up to Rs 5 lakh - 5 percent (Rebate up to Rs 12,500)

  • Rs 5 lakh to Rs 10 lakh - 10 percent

  • Rs 10 lakh - Rs 20 lakh - 20 percent

  • Rs 20 lakh to Rs 2 crore - 30 percent

  • Rs 2 crore and above - 35 percent

Current Income Tax Slabs And Rates:

Income Slabs (Individual below 60 years of age) Tax Rates Income Slabs (resident & above 60 years but below 80 years) Tax Rates Income Slabs (resident & above 80 years) Tax Rates
Total income up to Rs. 2.5 Lac NIL Total income up to Rs. 3.00 Lac NIL NA NA
Total income exceeds Rs. 2.5 Lac but less than Rs.5 Lac 5% on amount exceeding Rs. 2.5 Lac Total income exceeds Rs. 3 Lac but less than Rs.5 Lac 10% on amount exceeding Rs. 3.00 Lac Total income up to Rs. 5 Lac NIL
Total income exceeds Rs. 5 Lac but less than Rs.10 Lac 20% on Income exceeding Rs. 5 Lac + Rs. 25,000 Total income exceeds Rs. 5 Lac but less than Rs.10 Lac 20% on Income exceeding Rs. 5 Lac + Rs. 20,000 Total income exceeds Rs. 5 Lac but less than Rs.10 Lac 20% on Income exceeding Rs. 5 Lac
Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1,25,000 Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1,20,000 Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1 Lac

The government has announced a full tax rebate (Rs 12,500) to individuals having a net taxable income upto Rs 5 lacs, they can claim the tax rebate under 87A and thus effectively pay zero tax. The body has also recommended the removal of dividend distribution tax and scrapping the minimum alternate tax. Further, it wants the government to avoid levying surcharges.

(The above story first appeared on LatestLY on Aug 29, 2019 02:36 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).