RTTNews - The government on Wednesday, proposed a new direct tax code that would benefit tax payers, reports the PTI. The new code proposes 10% tax for income up to Rs.10 lakh. Income between Rs.10 lakh and Rs.25 lakh would be taxed at 20% and income above the limit would attract 30% tax. Currently 20% tax is charged for those who earn between Rs.3 lakh and Rs.5 lakh and 30% for above Rs.5 lakh. However, the code maintains the present ceiling of income tax exemption at Rs.1,60,000 per year.
The new code suggests an increase in tax deduction on savings of Rs.3 lakh and wanted all perks to be included to income for taxation purpose. It also recommended a lower corporate tax of 25% compared to the existing 30% and proposed a change in methodology for computing the Minimum Alternate Tax (MAT), levied on those companies those who do not pay tax due to various exemptions. Companies are now charged surcharges and cess besides corporate tax.
As per the new code, the foreign companies have to pay 25% corporate tax and will have a liability of 15% branch profit tax.
Finance Minister Pranab Mukherjee said that if a reasonable level of discussion happens on the code, a bill on direct tax code could be placed during the winter session of Parliament. Following approval, the new code would replace the Income Tax Act of 1961 and other related laws.
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