of the options is to introduce a 10 per cent slab for people having
taxable income between Rs 5 lakh and Rs 10 lakh. Currently, this slab
attracts a 20 per cent tax rate. There are also options to remove cess,
surcharge and several tax exemptions and reduce tax rate of the highest
slab from 30 per cent to 25 per cent, the report said.
"Depending on the impact the decision could have on revenue, various
scenarios are being considered. But the idea is to give at least a 5
percentage point benefit to every taxpayer," the report
quoted
government officials as saying.
If the government goes with the idea of a 10 per cent slab for people
having taxable income between Rs 5 lakh and Rs 10 lakh, it'd be in line
with recommendations of the task force on the Direct Tax Code (DTC),
which submitted its report on August 19.
As
Business Standard reported last month, the panel has suggested an overhaul of personal
income tax (I-T)
slabs, to increase disposable income. The draft legislation has
proposed four tax brackets by introducing a new slab of 35 per cent for
those earning an annual income of Rs 2 crore and above. The panel has
also suggested the increase in the threshold for exemption from
income tax to Rs 5 lakh a year from the current Rs 2.5 lakh.
The panel has proposed lower rates of 10 per cent for annual income
between Rs 5 lakh and Rs 10 lakh, 20 per cent for income between Rs 10
lakh and Rs 20 lakh. For income of Rs 20 lakh to Rs 2 crore, the
suggested rate is 30 per cent.
Currently, personal income is taxed at 5 per cent for income between
Rs 2.5 lakh to Rs 5 lakh, at 20 per cent for income between Rs 5 lakh
and Rs 10 lakh, and 30 per cent for an income of above Rs 10 lakh.
Quoting experts, the
Hindustan Times report said the
government's move may come ahead of Diwali "which will create demand
instantly and boost consumption and therefore growth".
Notably, the government has already slashed corporation tax rates to boost investment and sentiment.
Finance Minister Nirmala Sitharaman, last month, announced a
corporation tax rate cut to 22 per cent for companies, which becomes
25.17 per cent after accounting for cess and surcharge, against the
current rate of 34.94 per cent. However, the reduced rate will apply
only to those companies not availing exemptions, and others could opt
for the reduced rate once the sunset clauses on the exemptions end. The
rate of minimum alternate tax was also cut from 18.5 per cent to 15 per
cent.