Ex finance secretary favours 4 rate income tax structure without cess

Ahead of the Budget, former Finance Secretary S C Garg on Sunday suggested a simplified four-rate personal income tax structure without cess or surcharge amid increasing clamour for moderation in tax rate.

Following corporate tax rate cut in September, there has been growing demand for reduction in personal income tax which have developed deformity over the years due to cess and surcharge.

"Corporate Tax structure has been made reasonable and competitive during the current year. No more action is expected in this regard. There are quite a few major tax reforms, which need to be undertaken in the taxation structure of Personal Income Taxes," he said in a blog.

There are as many as eight slabs of income tax with the highest effective tax rate exceeding 40 per cent.

Emphasising that rate structure should be reformed, Garg said, "a rate structure with no tax for taxable income less than 5 lakh, 5 per cent on income from 5-10 lakh, 15 per cent on income from 10-25 lakh, 25 per cent on income from 25-50 lakh and 35 per cent on income more than 50 lakh would be quite a simple and fairer structure."