Budget 2023: New tax regime "sweetened" to benefit the maximum number of taxpayers, says CBDT Chairman
Budget 2023: The government has introduced the new tax regime as the default one, but it is just a mechanism opted for the government to make tax filing easier for the people, says CBDT Chairperson Nitin Gupta.
Budget 2023: The new income tax regime for filing returns has been "sweetened" in the Budget 2023-24 and it will be beneficial for the maximum number of taxpayers as they can enjoy a "reduced" tax rate, CBDT Chairman Nitin Gupta said.
The government has introduced the new tax regime as the default one, but it is just a mechanism opted for the government to make tax filing easier for the people, said Nitin Gupta in an exclusive interaction with Zee Business.
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Speaking during a post-Budget interview, Gupta said the intent of the government while announcing the new slabs and rates under the new tax regime is to gradually "do away with deductions and exemptions" so that the "long-standing demand of reduction of taxes for individual taxpayers and entities can be met."
Finance Minister Nirmala Sitharaman, while presenting the Budget 2023-24 in the Parliament on Wednesday, said the government has made the new income tax regime more attractive for taxpayers and has thus brought about 'substantial changes' in its structure for the benefit of the middle class.
"This new regime for individuals was laid down two years ago (Budget of 2020-21) but probably the benefits were not percolating and now the government has re-tweaked the slabs, re-tweaked the number of slabs and rates and the benefit is now clearly visible, be it any taxpayer...," the CBDT Chairman told the news agency.
He said a similar measure taken for the corporate category of taxpayers sometime back has been found to be beneficial for them. He did not say the number of individual taxpayers who opted for the new regime over the last two years.
"The new regime is really sweetened... The section of taxpayers who will not be benefitting will be a very minuscule section which is taking all sorts of benefits in terms of the interest in the house property, the deductions under section VIA among others, and only those types of taxpayers could be impacted in terms of they would be better off in the old regime."
"Barring that, the new regime would be beneficial to everyone," Gupta said. The Central Board of Direct Taxes (CBDT) is the administrative body for the Income-tax department.
The CBDT chief said that the government went into various aspects of the new tax regime, and bettered it and therefore in the latest Budget, a "parity" of sorts has been achieved between the two schemes.
"There are about 3.5 crore salaried taxpayers in India and every salaried taxpayer will be at par with the old regime if they opt for the new regime because standard deduction has been made available in the new regime...So in terms of parity it has been established."
"With the reduced number of slabs and wider slabs, the benefit will be percolating to everyone now and the long-standing demand of reduction of taxes will be met," he said.
Asked if the Finance Minister's declaration that the new tax regime will be a "default" tax option will affect the users of old regime in any way, the CBDT Chairman said the taxpayers will have full independence to choose any one of the tax filing systems and none of them will be at any loss including the facility to reverting to the old scheme.
"The new regime is the default scheme in the sense that what will come up on the screen (on the e-filing portal) will be the new regime but the option is intact and the taxpayer can shift between the regimes..."
"There is no disincentive for any section of taxpayers and they can opt for the regime which they want to," he said.
Gupta said an 'online calculator' will also be provided to the taxpayers, like before over the e-filing portal, to compare their tax liabilities under the two regimes. As per the changes proposed in the Budget, no tax would be levied on people with annual income of up to Rs 7 lakh under the new tax regime but it made no changes for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA.
Under the revamped new tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5 per cent; Rs 6-9 lakh at 10 per cent, Rs 9-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent. "This will provide major relief to all taxpayers in the new regime," Sitharaman said in her Budget speech.
An individual with an annual income of Rs 9 lakh will be required to pay only Rs 45,000. This is only 5 per cent of his or her income. It is a reduction of 25 per cent on what he or she is required to pay now (in the old regime) -- Rs 60,000, she said.
It was a long-pending demand to simplify the Old #IncomeTax Regime. Tax evasions happen due to higher tax rates. People show willingness to pay tax if rates are less. That's why we brought the New #IncomeTaxRegime.: FM @nsitharaman@nsitharamanoffc @FinMinIndia #AmritKaalBudget pic.twitter.com/7Wsp9Bm4l1
— Ministry of Information and Broadcasting (@MIB_India) February 2, 2023
"Similarly, an individual with an income of Rs 15 lakh would be required to pay only Rs 1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of Rs 1,87,500," Sitharaman said. The minister later told reporters during a press conference on Wednesday that the government wants to make the new tax regime attractive enough and compliance should not be burdensome on taxpayers. However, if someone feels the old regime is more beneficial, he/she can continue in it.
"The ultimate interest is to make the simpler (new) regime more attractive," she said.