The draft direct tax code has set the base slab at Rs1.6-10 lakh and the top slab at Rs25 lakh for personal income tax purposes, finance minister Pranab Mukherjee told the newly constituted parliamentary consultative committee attached to his ministry yesterday.
Mukherjee said the proposed slab rates for personal income tax would put more money in the hands of consumers. The draft code has fixed the rate slabs for personal income tax in the case of individuals as under:
- Rs1.6 lakh to Rs10 lakh - 10 per cent.
- Rs10 lakh to Rs25 lakh - 20 per cent.
- More than Rs25 lakh - 30 per cent.
For corporate tax payers, he said the code has fixed income tax rate at 25 per cent of the taxable income.
He said the arm's length principle proposed for advance pricing agreement (APA) in respect of international transactions will provide certainty in cross border transactions with taxpayers. It will also facilitate investments into India.
He said industry has been demanding the introduction of APA in India for quite some time. This proposal is in line with the best practices adopted by many countries across the globe.
The draft code also aims at rationalisation of deductions and exemptions for streamlining the administrative processes while also seking to reduce the rent seeking behavior.