DTC proposes tax relief; 10% for Rs 5-10L annual income

DTC proposes tax relief; 10% for Rs 5-10L annual income

The task force further proposed abolishing the dividend distribution tax.(Photo by rawpixel from Pexels)

Citizens with income between Rs 5 lakh and 10 lakh per annum may have to pay 10% income tax if a government set-up high-level tax force recommendations are accepted.

The task force on direct taxes has proposed radical changes in personal income tax slabs, according to the recommendations, a CNBC-TV18 news report said.

DH's report on August 20 predicted the improvisations on personal income tax.

DH reported that the income tax rates for individual taxpayers will be much lower, surcharges on income will be a thing of the past and companies will not have to pay taxes on the dividends they earn, if the Centre accepts the recommendations of a task force on Direct Taxes Code (DTC) that submitted its report on Monday after nearly two years of churning.

The tax force was formed aiming to simplify and improve tax provisions and certainty and to replace the 58-year-old Income Tax Act and was led by Central Board of Direct Taxation (CBDT) member Akhilesh Ranjan. The report was submitted on August 19.

According to the report, five brackets were proposed for personal income taxation, as follows:

  • Zero tax levy on annual income between Rs 0-2.5 lakh
  • 10 per cent on income between Rs 5 -10 lakh
  • 20 per cent on income of Rs 10 to 20 lakh
  • 30 per cent tax rate for income bracket of Rs 20 lakh - Rs 2 crore 
  • 35 per cent for the income of Rs 2 crore and above per annum

The task force further proposed abolishing the dividend distribution tax while retaining the longterm capital gains tax and securities transaction tax, according to The Economic Times.

15 per cent dividend distribution tax of the aggregate dividend declared distributed or paid by a domestic company, the report added.

The report was to be submitted by the tax force by May 31, but the then finance minister Arun Jaitley had given a two-month extension.

Finance Minister Nirmala Sitharaman said, moments before the submission of the report, that the government would support wealth creators and that corporate tax rate for all companies would gradually come down.