In what could provide a major relief to income tax payers, the Government proposed to tax only 10 per cent of income up to Rs 10 lakh while under the existing regime this relief is limited to people with income of Rs three lakh only.
Income between Rs 10 lakh and Rs 25 lakh would be taxed at the rate of 20 per cent and earnings thereafter would attract a rate of 30 per cent, as per the draft of the new Direct Taxes Code which is aimed at radical direct tax reforms. At present, 20 per cent rate is imposed on income between Rs 3 lakh and Rs 5 lakh. Income beyond Rs 5 lakh attracts 30 per cent tax.
The Direct Taxes Code was released by the Government for public discourse and when approved it would replace the Income Tax Act of 1961 and other related laws.