Direct Tax Code is cleared by Cabinet and now the road for introducing the DTC Bill in parliament is paved. There is some relief given in form of small tax rate cut.
The corporate tax rate, which currently stands at 33% has been reduced to 30%, including cess and surcharge. The original draft had proposed 25%, but it has been revised upwards.
- The basic tax exemption has been set at Rs 2 lakh.
- Incomes between Rs 2 lakh and Rs 5 lakh will be taxed at 10%,
- income between Rs 5 lakh and Rs 10 lakh will be taxed at 20% and
- for income above Rs 10 lakh a tax of 30%. Tax exemption for senior citizens will be Rs 2.5 lakh.
- Dividend distribution tax and capital gains tax will remain unchanged.
- Wealth tax has been set at 1% above Rs 1 crore, while
- minimum alternate tax or MAT has been set at 20% on book profits.