Asserting that the last word would be Parliament's, Finance Minister Pranab Mukherjee on Friday said the government would take a final view on the new tax slabs under new legislation only after receiving inputs from different stakeholders on the revised draft of the Direct Taxes Code (DTC).
The Minister was replying to a question whether the government was likely to retain the tax slabs suggested in the original DTC draft.
The original draft, released in August, proposed 10 per cent tax on an annual income of Rs.1.6 lakh-Rs.10 lakh, 20 per cent on Rs.10 lakh-Rs. 25 lakh and 30 per cent beyond Rs. 25 lakh. At present, 10 per cent tax is levied on income between Rs. 1.6 lakh and 5 lakh, 20 per cent on Rs. 5 lakh-8 lakh and 30 per cent beyond Rs. 8 lakh.
However, the revised DTC draft, on which the Finance Ministry has invited comments from the public till June 30, is silent on the proposed tax slabs. “The proposal in this revised discussion paper would lead to a reduction in the tax base proposed in the DTC. The indicative tax slabs and rates and monetary limits for exemptions and deductions proposed in the DTC will, therefore, be calibrated accordingly while finalising the legislation,” the revised draft said.
Mr. Mukherjee said what had been circulated were only discussion papers and the tax structure would be revealed in Parliament when the new law was introduced, mostly likely during the monsoon session.
Transaction tax
In another development, the Ministry said it was open to the idea of tagging the securities transaction tax (STT) with the capital gains tax or continuing the levy in its present form. “We will calibrate STT later on. Whichever is convenient for revenue, whether to continue the STT or tag it on to the capital gains tax, that call we will take,” Central Board of Direct Taxes (CBDT) chairman S.S.N. Moorthy told journalists here.
The STT, introduced in 2004-05, is a tax on every transaction in securities markets. It is levied at 0.010 per cent per trading in the derivatives market.
Mr. Moorthy's comment assumes importance as the revised DTC draft proposed that the STT be retained, even as it suggested restoration of the long-term capital gains tax, which is levied on gains made on selling of shares after more than a year of buying them.
“STT is a different legislation. It is not part of Income Tax Act per se . It is a separate arrangement, so we have kept it as it is. Let us see how we are going to calibrate capital gains tax, then we will take a call on STT,” he said.
