Key suggestions of DTC panel: Rejig of personal income tax slabs, cut in corporate tax

As of now, for taxpayers below 60 years of age, there’s nil tax on income up to Rs 2.5 lakh, 5 per cent tax rate for income between Rs 2.5-5 lakh, 20 per cent tax rate for income between Rs 5-10 lakh and 30 per cent for income above Rs 10 lakh.

Finance Minister Nirmala Sitharaman receives the report of Direct Tax Code panel from Akhilesh Ranjan, a Member of the CBDT in New Delhi on Monday. (PTI)

The ‘Task Force for drafting a New Direct Tax Legislation’ submitted its report and a draft of the new proposed version of the Income-tax law to Finance Minister Nirmala Sitharaman on Monday.

A rejig of personal income tax slabs, roadmap of corporate tax rate cut to 25 per cent for companies, suggestions to reduce compliance burden by simplification of procedures, and litigation management are some of the key recommendations which are learnt to have been outlined by the panel in its report.

“Union Minister of Finance and Corporate Affairs Smt. @nsitharaman received the report submitted by Shri Akhilesh Ranjan, Convenor of the Task force constituted by the Government to draft New Direct Tax Law, in New Delhi today,” Finance Ministry said in a tweet Monday. The report of the Task Force is yet to be made public. Sources said Finance Ministry will take the final call about further action on the report and the timing to make the draft public. In the four slabs of personal income tax currently, the panel is learnt to have suggested a rejig in rates between 5 per cent to 20 per cent. As of now, for taxpayers below 60 years of age, there’s nil tax on income up to Rs 2.5 lakh, 5 per cent tax rate for income between Rs 2.5-5 lakh, 20 per cent tax rate for income between Rs 5-10 lakh and 30 per cent for income above Rs 10 lakh.

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Some tweaks have also been suggested for dividend distribution tax and minimum alternate tax. The Task Force has been mired with delays since its constitution in November 2017. The Finance Ministry had recently extended the deadline for submission of the report to August 16, which had further got extended to August 19.

The Task Force, headed by former CBDT Member (Legislation) Arbind Modi, was constituted in November 2017 in order to review the Income-tax Act and to draft a new Direct Tax Law. Then, in November 2018, the Finance Ministry appointed Akhilesh Ranjan, Member (Legislation), CBDT, as convenor of the task force after the retirement of the earlier convenor Modi.

Corporate tax to be cut gradually to 25% for all

New Delhi: Finance Minister Nirmala Sitharaman said on Monday that the government would trim the corporate tax rate gradually to 25 per cent for all companies, including the large ones with an annual turnover of over Rs 400 crore.

She, however, did not give a time frame for this move. The government has, over the last five years, trimmed the rate to 25 per cent from 30 per cent in a phased manner for 99.3 per cent of companies.

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However, the 0.7 per cent large companies that don’t enjoy this benefit make up for almost 80 per cent of the total corporate tax collection and are subject to as much as a 30 per cent tax.

Sitharaman also promised all possible help to “wealth creators”. —FE

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