Government hints at change in income tax system – Punekar News
New Delhi, August 15, 2022: The Ministry of Finance plans to overhaul the tax system without exemptions or concessions. Sources say the tax reduction in the new system will make it more attractive. A similar tax system was introduced for corporate taxpayers in September 2019. As part of this, the tax rate was reduced and exemptions or concessions were also removed.
Sources say the government intends to introduce a no-holds-barred tax system. Along with this, the government wants to get rid of the old complicated tax system with exemptions and deductions. A new tax system was introduced in the general budget 2020-21.
In this new tax system, taxpayers had the option of choosing between the old regime with various deductions and exemptions and the new regime of reduced rates without exemptions or deductions.
Sources say there are clear indications that those who have paid off their housing and education loans are ready to switch to the new tax system.
Sources further indicate that the purpose of introducing the new tax system in 2020-21 was to make the tax system easier for taxpayers. At the same time, investors’ choice of options had to be improved for convenience to avoid unnecessary investments in the name of tax exemption.
Under the new tax scheme 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 five percent tax. Similarly, 10% on income between Rs 5 lakh and Rs 7.5 lakh, 15% on income between Rs 7.5 lakh to Rs 10 lakh, 20% on income between Rs 10 lakh and Rs 12.5 lakh, 25% on income between Rs 12.5 and 15 lakh. and 30% for income above Rs 15 lakh.