Between 2 tax regimes, nobody will be worse: secretary of income

NEW DELHI: Explaining the justification for offering a choice between a flat rate and a detailed system, the government On Sunday he said that the new income tax rates would not make anyone worse and the measure allowed taxpayers to decide which regime would suit them depending on their interests.

In an interview with TOI, revenue secretary said the government ’s move would benefit a large section of population, such as seniors who did not want to park money in tax-saving instruments and had paid down housing loans or youngsters just joining the workforce. Such people do not have substantial amounts to purchase life covers or deposit money in public provident fund (PPF).

The data available with the tax department showed that of the approximately 5.8 million crore that filed returns for fiscal year 2018-19, 5.3 crore claimed income tax deductions of less than Rs 2 lakh, including the deduction under the section 80C of the Income Tax Law (for fund provision, PPF, life insurance premium), section 80D (medical insurance), section 80CCD (1B) (additional deduction for), interest deduction for home loans and.

Live plus The Budget announcement of a new structure, promising lower income tax rates for those who give up exemptions with allowances such as HRA and leave travel added to their income, has generated considerable debate. While the government says the move will benefit a large section, analysts say a significant part of the salaried middle-class may not gain by transitioning to the new system.

We see that a few 3.77 lakh taxpayers have claimed deductions greater than Rs 4 lakh ... the choice is with the taxpayers: choose the old or the new regime. Not a single taxpayer will lose in the process, ”said Pandey, adding that the proposed system would make life easier for those who chose him. He said the assumption that all exemptions are taken into account for all slabs is not reflected in the actual presentations.

He said the government would need plus resources to ensure that all or most taxpayers are better off. The current exercise is estimated to result in a Rs 40,000 crore loss. “Ideally, we should bring down the tax rate to a level that everyone benefits. Given fiscal constraints, this is not possible,” Pandey said, adding that the government may lower rates and wipe out exemptions when revenues stabilise.