The story is here from the Times of India, sent to me by Shalini.

Changes to tax rates

Here are the current tax rates:

Now 10 per cent is levied on incomes of Rs 1.6-3 lakh, 20 per cent on Rs 3-5 lakh and 30 per cent above Rs 5 lakh.

Here are the new rates:

The government on Wednesday initiated radical tax reforms through a draft code that aims at moderating income tax rates, abolishing Securities Transaction Tax and increasing deduction for savings up to Rs three lakh. The new Direct Taxes Code has suggested a significant expansion of personal income-tax slabs, with levels of relief going up with incomes.

Releasing the Direct Taxes Code that will ultimately replace the over four-decades old Income Tax Act and bring all other direct taxes like wealth tax under its purview, Finance Minister Pranab Mukherjee today said if reasonable level of discussion happens on the code, a bill could be placed in the winter session of Parliament.

The Code said that the 10 per cent tax rate should apply to an annual income of Rs 1.6-10 lakh per annum and the 20 per cent rate to Rs 10-25 lakh.

The maximum rate of 30 per cent, it added, should apply to income above Rs 25 lakh per annum.

The new rates, it said, “are expected to yield the existing level of revenues with the revised comprehensive tax base proposed in this code”.

Indian tax brackets

Here are my calculations… are they wrong?

First bracket (10%): 1.6 to 10 lakh = 10 x 100,000 rupees = 1,000,000 rupees = up to 20,000 USD.

Second bracket (20%): 10 to  25 lakh = 10 x 100,000 rupees = 1,000,000 rupees = up to 50,000 USD.

Third bracket (30%): over 25 lakh = 10 x 100,000 rupees = 1,000,000 rupees = over 50,000 USD.

Changes to encourage more saving

Not only are they slashing income tax rates but they are increasing the deductions for savings.

I can’t believe this. India is doing everything RIGHT and we are doing everything WRONG. Even Canada is signing free trade deals, while Inspector Clouseau is trying to make us into North Korea. India is buying arms, we’re cutting the F-22 and missile defense.