New Delhi: The government is mulling extending relief to tax payers by planning to change slabs on personal income, with 5% tax proposed to be levied on income up to Rs 7 lakh per year, while income between Rs 7 lakh and up to Rs 10 lakhs may be taxed at 10%.
Taxpayers as of now are paying the same percentage of direct tax on earning up to Rs 5 lakh.
The announcement will be part of the tax proposals for the next financial year and will be announced by Finance Minister Nirmala Sitaraman in her Budget Speech on February 1, CNBC-Awaaz has learnt.
In the interim budget presented by the Modi government in February 2019, the government had given relief to taxpayers whose annual income was less than Rs 5 lakh.
The government had announced zero liability if taxable income did not exceed Rs 5 lakh.
The government may levy 20% tax on income between Rs 10 lakh and Rs 20 lakh. Taxpayers between Rs 20 lakh and Rs 10 crore will be under the 30% tax slab. A new slab of 35% is likely to be announced for those earning more than Rs 10 crore per year.
Sitharaman had announced a corporate tax cut that would affect the central kitty by Rs 1.45 lakh crore. This was done as part of a series of measures taken to spur growth in the face an economic slowdown.
The minister, however, did not announce any major tax relief to income tax payers in her maiden budget presented after the Modi government won clear majority in general elections last year.
The cut in corporate tax has revived demands for relief in personal income tax as well.