Thursday, June 13, 2024
HomeBusinessSitharaman defends new tax mechanism: ‘Gains from old regime’s simplicity remain’

Sitharaman defends new tax mechanism: ‘Gains from old regime’s simplicity remain’

Union Finance Minister Nirmala Sitharaman Friday defended the new income tax regime, saying it had not reversed any gains from the old regime’s simplicity.

“If indeed there were gains of simplicity (from the old income tax regime), I want to assure they have not been reversed,” Sitharaman said in New Delhi. “People have been filing returns under it. Gains of simplicity are still there.”

The minister was responding to an assertion made in the book Reform Nation, authored by Observer Research Foundation Vice President Gautam Chikermane, which states that the new and voluntary income tax regime had removed the simplicity of the old one, which had just three tax slabs of 10 per cent, 20 per cent, and 30 per cent.

Sitharaman, while speaking at the book’s launch, said the old income tax regime is not at all simple as it is “full of exemptions”.

“For every tax assessee, it has 7, 8, 9, 10 exemptions. And with all that exemptions, the rate 10, 20, 30 per cent continues. It continues even today. We have not removed it. What we have done in the name of simplicity and to avoid harassment… removing harassment was what was aimed at when we brought in faceless tax assessment,” she said.

Most Read 1Chandrayaan-3 mission: Dawn breaks on Moon, all eyes on lander, rover to wake up 2As Indo-Canadian relations sour, anxiety grips Indian students, residents who wish to settle in Canada 3Karan Johar says Sanjay Leela Bhansali did not call him after Rocky Aur Rani: ‘He’s never called me but…’ 4Gadar 2 box office collection day 40: Hit by Shah Rukh Khan’s Jawan onslaught, Sunny Deol movie ends BO run with Rs 45 lakh earning 5Shubh’s tour in India cancelled: Why is the Canada-based singer facing the music?

“In order to keep the simplicity and not deny those who want to keep the old simplicity, we kept that intact but we have come up with a parallel system which has no exemptions whatsoever, but which has simpler, more favourable rates… The reason why I had to bring in seven slabs was to make simpler and lower rates for those who are in the lower incomes,” she said.

In the 2020-21 budget, the government brought in an optional income tax regime under which individuals and Hindu Undivided Families were to be taxed at lower rates if they did not avail specified exemptions and deductions, such as house rent allowance, interest on home loan and investments under Section 80C. Under this, total income up to Rs 2.5 lakh will be tax exempt.

Also ReadGovt may soon tweak PLI schemes for pharma, textiles, dronesEPFO records highest net member addition of 18.75 lakh in JulyTense diplomatic relations may not impact trade, investment ties between …UK inflation unexpectedly falls, raising questions about BoE rates plan

A 5 per cent tax is levied on total income between Rs 2.5 lakh and Rs 5 lakh, 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs 10 lakh to Rs 12.5 lakh, 25 per cent on Rs 12.5 lakh to Rs 15 lakh, and 30 per cent on above Rs 15 lakh. Under the old system, income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5 lakh and Rs 5 lakh attracts 5 per cent tax, while 20 per cent tax is levied for income between Rs 5 lakh and Rs 10 lakh. Income above Rs 10 lakh is taxed at 30 per cent.

© The Indian Express (P) Ltd

- Advertisment -

Most Popular