After corporate tax to companies, now the central government can give income tax relief to the middle class too. The workforce has suggested a change in the tax slab to provide relief to the middle class as well. The tax rate can be increased from 20 to 10 percent on income of five to 10 lakhs. At the same time, those earning 10 to 20 lakhs annually will have to pay 20 percent tax. The workforce has suggested that income tax of Rs 20 lakh to Rs 2 crore should be taxed at 30 per cent and income above 35 per cent. It is also suggested to remove surcharges and cess levied on income tax.
Prepare to give one more relief to companies after corporate tax, know what is the plan of the center
The central government can provide another relief to companies after corporate tax. Indeed, to encourage investment, the Task Force on the Direct Taxes Code has recommended abolition of dividend distribution tax (DDT). According to sources, the workforce has stated that DDT is a tax on tax and this hinders the flow of foreign investment.
A domestic company has to pay a dividend distribution tax of 15 per cent on the gross dividend. Including surcharge and cess, this tax becomes 20.35 percent. A total surcharge of 12 per cent and education cess is 3 per cent. According to sources, the removal of this tax will cause a very small revenue loss to the government, as it will be offset by the tax paid by the shareholders. The new direct tax code will replace the existing income tax law. The task force has submitted a report to the Finance Ministry last month, which is being discussed.
The workforce has also suggested strict adherence to regulations to increase revenue collection. The government has reduced the tax on all domestic companies from 25 per cent to 25 per cent, following a recommendation of the report last month. If cess and surcharge are removed, companies will have to pay 22 per cent tax. It is considered to be the biggest economic recovery in 28 years. New manufacturing units will have to pay only 17 per cent tax, which will be just 15 per cent excluding cess.