A proposal to tax the super-rich at a higher income tax rate of 35 per cent in the Direct Taxes Code (DTC) Bill was not taken up by the Cabinet today.
While the Bill proposes to keep exemption limit at Rs 2 lakh for individual tax unchanged, it proposes to introduce a fourth slab of 35 per cent tax rate for those with an annual income of over Rs 10 crore.
"The DTC Bill was not taken up by the Cabinet today," Information and Broadcasting Minister Manish Tewari told reporters after a meeting of the Union Cabinet chaired by Prime Minister Manmohan Singh.
While Tewari did not give reasons for the Cabinet not taking up the Bill today, sources said it was possibly due to paucity of time and would be taken up at the next meeting.
Earlier in the day, Finance Minister P Chidambaram said the approval for the Bill was listed in the Cabinet agenda. "Lets see what the Cabinet members decide," he said.
Among other things, the Bill proposes to levy a 10 per cent tax on dividend income of more than Rs 1 crore.
Besides, Minimum Alternate Tax (MAT) may be levied on book profit and not on gross assets, sources said. Further, the Securities Transaction Tax (STT) is likely to be retained, as against the recommendation of the Standing Committee on Finance that the levy be abolished.
At present, tax is levied on income between Rs 2-5 lakh at 10 per cent, Rs 5-10 lakh at 20 per cent, and above Rs 10 lakh at 30 per cent. Further, those earning more than Rs 1 crore have to pay a surcharge of 10 per cent.
Sources said the government has accepted most of the 190 recommendations made by the Standing Committee on Finance, headed by Senior BJP leader Yashwant Sinha.