NEW DELHI: The Minister of Finance of the Union, Nirmala Sitharaman, presented new income tax (I-T) plates on Saturday and reduced tax rates. But the reduction in rates will only be implicit if a taxpayer chooses the above exemptions and deductions.
The finance minister announced that the new tax regime will be optional and taxpayers will have the option to remain in the old regime with exemptions and deductions or opt for the new reduced tax rate without those exemptions.
Under the proposal, people with an annual income of Rs 5 lakh to Rs 7.5 lakh will have to pay a reduced tax rate of 10 percent; between Rs 7.5 lakh and Rs 10 lakh 15 percent; between Rs 10 lakh and 12.5 lakh 20 percent; between Rs 12.5 lakh and 15 lakh 25 percent; and above Rs 15 lakh 30 percent, he said.
Live plus "The new tax regime shall be optional for the taxpayers. An individual who is currently availing plus deductions and exemptions under the I-T Act may choose to avail them and continue to pay tax in the old regime," the read.
The new staff will imply estimated lost revenue of Rs. Rs 40,000 million per year. We have also initiated measures to complete the tax return so that a person who opts for the new regime does not need the help of an expert to file their return and pay income tax, he added.
The document mentioned that those who earn up to Rs 5 lakh will not pay any taxes either in the old regime or in the new regime.
"In order to simplify income tax system, I have reviewed all the exemptions and deductions which got incorporated in the income tax legislation over the past several decades. It was surprising to know that currently plus than one hundred exemptions and deductions of different nature are provided in the Income-tax Act. I have removed around 70 of them in the new simplified regime. We will review and rationalise the remaining exemptions and deductions in the coming years with a view to further simplifying the tax system and lowering the tax rate," Sitharaman said.
It should be noted again that this new tax scheme is optional and those who opt for it must renounce the exemptions obtained under the old tax regime.
(With PTI tickets)