The DTC Bill, currently with a Parliament standing committee,
proposes to tax annual income over Rs 2 lakh up to Rs 5 lakh at 10 per cent,
more than Rs 5 lakh up to Rs 10 lakh at 20 per cent and income above Rs 10 lakh
at 30 per cent a year. Currently, income over Rs 1.80 lakh up to Rs 5 lakh
attracts 10 per cent income tax, over Rs 5 lakh up to Rs 8 lakh is taxed at 20
per cent and income above Rs 8 lakh is taxed at 30 per cent.
Finance ministry officials said there was scope for raising the
tax exemption limit, which currently stands at Rs 1.80 lakh for men and Rs 1.90
lakh for women. The DTC Bill seeks to increase this limit to Rs 2 lakh a year
for both the categories. Officials said the corporate tax rate may also be kept
intact at 30 per cent (exclusive of cess and surcharge).
On the indirect tax front, officials said the excise duty and service tax rates
may also be retained at the current level of 10 per cent. The ministry felt any
rise in the rate could hurt the industry and raise inflation. The peak customs
duty rate is also unlikely to be altered from the current 10 per cent, owing to
fears of revenue loss and its impact on the domestic industry. However, specific
proposals on tax rates could be altered. For instance, excise duty on diesel
cars could be raised, the officials said.
Retaining the current tax rates means the government would have to depend on
non-tax revenue and non-debt capital receipts to resume the path of fiscal
consolidation, as suggested by the Reserve Bank of India.
Business Standard, India, dated