The new Direct Taxes Code has suggested a significant expansion of personal income-tax slabs, with levels of relief going up with incomes.
The code, unveiled today by Finance Minister Pranab Mukherjee, said that the 10 per cent tax rate should apply to an annual income of Rs 1.6-10 lakh per annum and the 20 per cent rate to Rs 10-25 lakh.
The maximum rate of 30 per cent, it added, should apply to income above Rs 25 lakh per annum.
The new rates, it said, "are expected to yield the existing level of revenues with the revised comprehensive tax base proposed in this code".
At present, 10 per cent tax is levied on income of Rs 1.6-3 lakh, 20 per cent on Rs 3-5 lakh and 30 per cent above Rs 5 lakh.
The code also suggested that perquisites given to employees should be included in salary income, a recommendation that may inflate the taxable income of certain categories of salaried persons.
Besides, the code also suggested that tax rates for companies should be reduced to 25 per cent for both domestic and overseas companies. Currently, domestic companies are taxed at 30 per cent with surcharge and cess coming later.
Foreign companies should pay an additional tax of 15 per cent as branch profit tax, the code said.
