New Delhi: The Ministry of Finance plans to review the new tax regime without exemption soon with a view to making it more attractive to taxpayers with individual incomes, the PTI news agency reported citing sources. Eventually, the government aims to establish a system where there are no exemptions and the old complex tax regime with exemptions and deductions is removed, sources said.Also Read – Maharashtra Cabinet: CM Eknath Shinde Maintains Urban Development; Devendra Fadnavis Comes Home, Finance
The Union budget 2020-21 introduced a new tax regime. Taxpayers had the option of choosing between the old regime with various deductions and exemptions and the new tax regime which offered lower tax rates with no exemptions or deductions. The intention behind this decision was to provide significant relief to individual taxpayers and to simplify income tax law. Read also – Gold rate today: check the price of the yellow metal on August 14 in your city here
Asked about the experience of the new tax regime, sources said there were clear signs that people who have completed their home and school loans are willing to switch to the new tax regime as they have no exemptions to claim. . Sources further said that the reduction in taxes in the new tax regime would make it more attractive. Also Read – Breaking News LIVE: JP Nadda and Other BJP Leaders Participate in Silent March
Here are 5 more things to know about this big tax story:
- A similar tax regime for corporate taxpayers was introduced in September 2019 by significantly lowering rates and removing exemptions.
- The government had announced a reduction in basic corporation tax for then-existing corporations from 30% to 22%; and for new manufacturing companies, incorporated after October 1, 2019 and starting their activities before March 31, 2024, at 15% instead of 25%.
- Companies opting for these new tax rates will have to give up all exemptions and incentives.
- Under the new tax regime for individual taxpayers announced on February 1, 2020, persons whose annual income does not exceed ₹2.5 lakh do not pay any tax. For income between ₹2.5 lakh and 5 lakh, the tax rate is 5%.
- Additionally, those with an income of ₹5 lakh to ₹7.5 lakh have to pay a reduced tax rate of 10%; between ₹7.5 lakh and ₹10 lakh 15 percent; between ₹10 lakh and 12.5 lakh 20%; between ₹12.5 lakh and 15 lakh 25%; and above ₹15 lakh 30 percent.