INTRODUCTION OF NEW TAX CODE : 10% TAX UP TO RS. 10 LAKH INCOME

Dear Friends,

A major relief to tax payer when the government on Wednesday introduced a new direct tax code that seeks to simplify the tax regime in India replacing the Income Tax Act 1961.

According to new tax code / new direct tax code 10% tax up to Rs. 10 Lakh Income.
See new income tax slab under new direct tax code
The government proposed major tax reforms through a draft code that aims at moderating income tax rates, abolishing Securities Transaction Tax (STT) and increasing deduction for savings up to Rs 3 lakh.


“We expect to have better compliance and better collection of taxes,” Mukherjee said.


According to the new recommendations of the Code :


• 10 per cent tax rate should apply to an annual income of Rs 1.6-10 lakh per annum (Now 10 per cent is levied on incomes of Rs 1.6-3 lakh, 20 per cent on Rs 3-5 lakh and 30 per cent above Rs 5 lakh).
• 20 per cent rate rate should apply to an annual income to Rs 10-25 lakh per annum.
• The maximum rate of 30 per cent should apply to income above Rs 25 lakh per annum.
• Perquisites given to employees should be included in salary income (likely to inflate the taxable income of certain categories of salaried persons).
• 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.
• Abolition of the controversial STT (but the Code also suggests reintroduction of tax on long term capital gains on securities trading).


Note: Direct tax code to be implemented only by the end of 2011 or early 2012 after completed the process of debate and suggestion from public.

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