New Delhi, 15th August 2022: The Finance Ministry is planning to review the tax system free from exemptions or concessions. Sources say that reducing the tax in the new system will make it more attractive. A similar tax system was introduced for corporate taxpayers in September 2019. In this, the tax rate was reduced, and exemptions or concessions were also abolished.
Sources say the government intends to set up a tax system that does not have any concessions. Along with this, the government wants to do away with the complicated old tax system with exemptions and deductions. A new tax system was introduced in the General Budget 2020-21.
In this new tax system, taxpayers were given the option of choosing between the old regime with various deductions and exemptions and the new regime of lower rates with no exemptions and deductions.
Sources say there are clear indications that those who have repaid their housing and education loans are willing to switch to the new tax system.
Sources further state that the purpose of introducing the new tax system in 2020-21 was to make the tax system easier for income taxpayers. At the same time, the choice of investor options had to be improved per convenience to avoid making unnecessary investments in the name of tax exemption unnecessarily.
In the new tax regime introduced on February 1, 2020, for individual income taxpayers, people with an annual income of up to Rs 2.5 lakh would not have to pay any tax. Income between Rs 2.5 lakh and Rs 5 lakh attracts a tax of five percent. Similarly, 10 percent on income between Rs 5 lakh to 7.5 lakh, 15 percent on Rs 7.5 lakh to Rs 10 lakh, 20 percent on income between Rs 10 lakh and Rs 12.5 lakh, 25 percent on income between Rs 12.5 and 15 lakh. and 30 percent for income above Rs 15 lakh.