The grim economic scenario is likely to ring in a taxing time for the super rich as the government is planning to introduce new tax slab of 35 percent on Rs 10 crore or more earnings.
The cabinet will today take up the new Direct Taxes Code (DTC) Bill, which will introduce this fourth tax slab, said a CNBC TV18 report.
As of there are three tax slabs: income of Rs 2,00,001 to Rs 5,00,000 attract 10 percent tax, Rs 5,00,001 to Rs 10 lakh has 20 percent and above Rs 10 lakh 30 percent. Income above Rs 1 crore attracts a 10 percent tax surcharge.
The new Bill, however, is unlikely to give the common man any relief on exemption limit as it will be retained at Rs 2 lakh, the report said.
However, it is likely to make changes the Minimum Alternate Tax (MAT), which will be levied on book profit and not on gross assets, the 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.
Another key aspect of the Bill is the tightening of the wealth provisions.
According to the CNBC-TV18 report, all assets, physical and financial, will be included under the wealth tax, which be levied on individuals, Hindu undivided families and private discretionary trusts.
The threshold of this tax is Rs 50 crore and the rate 0.25 percent. There is no threshold for private discretionary trusts.
The Bill also has provisions to tax dividend, capital gains and indirect transfers of assets. On dividend, the additional tax has been set at 10 percent on dividend exceeding Rs 1 crore, said the CNBC-TV18 report.
Now, dividend is not taxed in the hands of the investor but the company pays a 15 percent dividend distribution tax.
The Bill also seeks to increase the tax liability of capital market investments by HNIs.
The DTC Bill, which aims to rationalise tax rates to bring more people and companies under the tax net, was introduced in Parliament in 2010.
Finance Minister P Chidambaram had earlier said he intends to bring the DTC Bill in the Monsoon session of Parliament, following submission of the Standing Committee's recommendations. The ongoing Monsoon session is scheduled to end on August 30.
The first draft prepared by Chidambaram in 2009 had proposed an income-tax slabs of Rs 1.6-10 lakh, Rs 10-25 lakh and Rs 25 lakh and above. Besides, corporate tax was proposed at 25 per cent.
This was followed by the draft DTC Bill prepared by then-Finance Minister Pranab Mukherjee in 2010, which proposed the slabs at Rs 2-5 lakh, Rs 5-10 lakh and Rs 10 lakh and above and corporate tax at 30 per cent.
The Standing Committee suggested slabs of Rs 3-10 lakh, Rs 10-20 lakh and Rs 20 lakh and above. On corporate tax, it recommended the rate be retained at 30 percent.
With inputs from PTI
Updated Date: Dec 20, 2014 21:51:50 IST