The Indian Cabinet has given the go ahead for the Direct Taxes Code Bill, which will simplify and rationalize both corporate and personal income taxes.
Under the bill, tabled in parliament on August 31, the corporate income tax rate would be reduced from an average of 33.22% to 30%. The 30% rate would also apply to non-resident business, which currently pay corporate income tax at a rate of just over 42%. The bill would also remove complications caused by surcharges and exemptions.
Subject to the approval of parliament, the personal annual tax-free income threshold may be raised from INR160,000 to INR200,000 (USD4,300), INR250,000 in respect of senior citizens. Tax bands above the threshold would be INR200,000 - 500,000, taxed at 10%, INR500,000-1,000,000 at 20%, and 30% on the income above above INR1m.
The proposed changes are likely to be effective from April 1, 2011.
.Tags: tax | law | business | legislation | tax rates | corporation tax | individual income tax | India
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