Proposal for new tax regime | Fusion - WeRIndia

Proposal for new tax regime

Proposal for new tax regime

In order to favour the middle-class, the Indian government has established a proposal recommending a new tax regime yesterday.

As per the new tax regime, the tax slab would be reduced to 10 per cent for people earning between ₹5 lakh and ₹10 lakh.

It is recommended by the government panel led by Central Board of Direct Taxation (CBDT) member Akhilesh Ranjan that the tax would be levied at 10 per cent on ₹5-10 lakh, and 20 per cent on an income of ₹10-20 lakh.

The zero tax would remain as such i.e. people who are earning below ₹2.5 lakhs need not pay income tax.

The recommendations have been forwarded to the Union Finance Ministry. Yet, there is no confirmation from the government on the timeline of approval.

Currently, the tax rate for the income between ₹5 lakh and ₹10 lakh is 20 per cent. It is 30 per cent on the income of over ₹10 lakh. The income tax for income between ₹2.5 lakh and ₹5 lakh is 5 per cent.

There is a proposal to introduce a new tax bracket of 35 per cent for the super-rich who are earning above ₹2 crore each year.

The economy is witnessing a slowdown at present and the rationalization in tax slabs would boost consumption and revive the economy.

The panel also proposed to remove the dividend distribution tax and scrap the minimum alternate tax.

It is recommended that the government needs to avoid levying surcharges.

The Income Tax Act has a history of 58 years. The panel was established to ease income tax provisions of the Act. At the same time, it is also intended to focus on improving tax certainty.

After the retirement of Arbind Modi, Akhilesh Ranjan was appointed as the convenor. Other members of the panel include Girish Ahuja, Rajiv Memani, Mukesh Patel, G C Srivastava and Mansi Kedia.

Image Credit: Image by Steve Buissinne from Pixabay (Free for commercial use)

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