In the new Direct Tax Code (DTC) Bill, corporate tax rate has been fixed at 30% including cess and surcharge, reports Media quoting sources. It is learnt that the basic exemption for income tax has been hiked to Rs 2 lakh.
The cabinet on Thursday decided the tax rates in the new direct tax code. In the personal income umbrella basic exemption for income tax is being hiked to Rs 2 lakh. For senior citizens, the exemption has been hiked to Rs 2.5 lakh.
The slabs are as follows:
Rs 2 lakh to Rs 5 lakh
5 lakh to Rs 10 lakh
The corporate tax rate is now going to be 30% including surcharges and cess etc, currently that rate is 33%.
The minimum alternative tax (MAT) has been set at 20% as book profits interestingly the dividend distribution tax as well the capital gains tax have not been changed.
The wealth tax however is now going to be - what the cabinet has approved rather is going to be - 1% for above Rs 1 crore. I can tell you with a lot of certainty that before the cabinet meeting tax rates have not been decided.
However, what I have picked from my source is that rates for tax deducted at source (TDS) have been decided. From the original draft, there have been some key changes for example income for mutual funds there is going to be a TDS rate of 10% for Hindu Undivided Family (HUFs) and individuals and 20% for other deductees for payments.
For life insurance policies, it is going to be 10% again for HUFs and individuals and 20% for other deductees.
The rationale has been to include these TDS net is to have better tax compliance. Also TDS has been hiked from 1% to 2% for payment on works contract, service contract, advertising as well as payment on rent for immovable properties, machinery and equipment. So those are some of the key tax rates that have been decided by the cabinet.