The direct tax code has been approved in the cabinet on Thursday 22 August 2013 and proposed a fourth slab in the income tax slabs for the person having income more than 10 crores. However the first slab remains the same of Rs. 2 lakh.
This is the first time since 1996-97 that the fourth slab will also come in picture as government is settled with 3 slabs of income tax. The new slab is for super-rich whose income is above Rs. 10 crores and attracts 35% tax rate.
Government is eying on the super rich to collect as much as it can. This introduction of new slab is the part of it. Government is going to largest revise of income tax act 1961. There is also a plan to levy a wealth tax at the rate of 0.25% on the net worth over Rs. 50 crores.
Further received dividends will also attract a 10% tax on value of above rest. 1 crore.
Foreign companies will have to pay tax if they buy into an Indian company if as a result 20% of the global assets of the new entity are located in India. The threshold was 50% as proposed in the version of the Bill in 2010.
Government also approves all the recommendation about General anti-avoidance rules and it also will be included in the direct tax code (DTC). These are a bit useful for the people who have worked or income from abroad.
Government has approved 153 recommendations out of 190 presented by PSC (Parliament standing committee). It includes all the changes made in 2011, 2012 and 2013 in the finance act.
The code has retained the 30% tax on corporate, as proposed in DTC 2010, and agreed to by the standing committee. It has also proposed what it calls ring-fencing of losses from businesses availing investment-linked incentive.
On the issue of personal income tax slabs, the committee has suggested Rs. 3 lakh starting slab on which government points out that there will be huge loss to the revenue if the initial slab exemption will be 3 lakh. Government like to introduce fourth slab for individual, HUF and artificial judicial person at rate of 35% on the income above Rs. 10 crores.
Tags-income tax slabs,fourth slab in income tax,super rich tax in india