This has been suggested by a committee set up to recommend changes in the direct tax code.
New Delhi: In a move to provide relief to the middle class, the government is considering lowering income-tax for individual taxpayers and restructuring the tax slabs. This has been suggested by a committee set up to recommend changes in the direct tax code.
This panel also proposed removing the surcharges and cess levied on income-tax to some extent, after which citizens will get huge relief by having to pay less tax.
In over a month, finance minister Nirmala Sitharaman has courageously taken big-bang economic measures in several rounds, including a major cut in corporate taxes last week. It is expected that she will announce further measures to boost the economy soon, that may include a cut in personal income-tax.
A key source told this newspaper: “After receiving the tax panel’s suggestion, the government reviewed the proposal thoroughly, examining all the pros and cons. For the benefit of the common man, the government is considering a sharp reduction in the personal income-tax slabs to some extent.”
“It will not only encourage new taxpayers, who can come forward to pay their taxes and put more cash in the government’s hands, but it can also boost both consumption and investment by the middle class for improving the country’s economy,” he added.
However, some media reports said implementation of the proposed move was quite unlikely as the country’s economic scenario was not favourable at this juncture.
The source, however, added: “Besides a cut in income-tax rates, personal income, the government is also planning to remove all surcharges and cesses levied on them. A wide-ranging overhaul in personal income-tax will certainly revive demand from middle income groups in the country.”
The tax panel, which submitted its recommendation over a month ago, has proposed a 10 per cent income-tax rate for individuals earning between Rs 5 lakhs and Rs 10 lakhs per year, against the current rate of 20 per cent.
“Individuals earning over Rs 20 lakhs per year should be taxed at 30 per cent and those earning over Rs 2 crores a year must pay 35 per cent as income-tax,” the panel’s recommendations had said.
At present, individuals earning incomes between Rs 2.5 lakhs and Rs 5 lakhs are taxed at five per cent. Income between Rs 5 lakhs and Rs 10 lakhs are taxed at 20 per cent, and more than Rs 10 lakhs is subjected to the income-tax slab of 30 per cent.
The task force, headed by Central Board of Direct Taxes member Akhilesh Ranjan, had said the new tax code would simplify tax laws and reduce the number of exemptions.