Difference between current income tax and direct tax code

According to a Business Standard report, the expert panel has recommended a significant increase in the highest income-tax slab, besides slashing the corporation tax rate to an even 25 per cent for both domestic and foreign companies. Income taxpayers earning up to Rs 55 lakh a year might end up with a major tax relief if the panel’s recommendation to change the tax bracket and rebates is accepted.

Key points of Direct Taxes Code 2.0

— Those earning up to Rs 55 lakh may get major tax relief

— Foreign firms may have to pay branch profit tax

— Dividend distribution tax may be done away with

— A slew of incentives for start-ups

— Assessing units to replace assessment officers

— Mechanism of mediation between taxpayers and CBDT

— Proposed DTC to have far fewer sections than over 700 in the Income Tax Act 

As per the current income tax slabs, taxation of income of resident individuals below 60 years is as follows: Income up to Rs 2.5 lakh is exempt from tax, 5 per cent tax on income between Rs 250,001 to Rs 5 lakh; 20 per cent tax on income between Rs 500,001 and Rs 10 lakh; and 30 per cent tax on income above Rs 10 lakh