The Cabinet is likely to clear the Direct Taxes Code (DTC) Bill, 2013, on Thursday, which will bring in sweeping changes in India’s income tax regime, including a higher 35% tax for the super-rich, rejigging the existing slabs and wealth tax on a host of new assets, such as expensive watches and paintings.
The new DTC Bill, 2013, which the government plans to pass in Parliament’s ongoing monsoon session, is likely to introduce a fourth tax slab for those with an annual income above a certain threshold.
As of now, individuals are clubbed in three tax slabs depending upon their annual income. Those with an income less than Rs. 2 lakh annually are exempt from paying taxes; those earning between Rs. 2 lakh and Rs. 5 lakh are taxed at 10%; those who earn between R5 lakh and Rs. 10 lakh have to pay a tax of 20%, while anybody earning more than Rs. 10 lakh fall in the income-tax bracket of 30%. These slabs are likely to be changed in the new law.
In addition, you may also have to pay an additional tax of 10% if your annual earnings on dividend on mutual funds and equities exceed Rs. 1 crore.
For companies, a minimum alternate tax (MAT) may be levied on book profit and the securities transaction tax (STT) is likely to be retained.
With the economy showing no signs of recovery and all government efforts to shore up the rupee coming to naught, the government is looking at ways to increase its earnings.