With the introduction of the new income tax regime in the latest union budget, the government expects that 69 per cent of taxpayers will save money on the tax payouts.
With the introduction of the new income tax regime in the latest union budget, the government expects that 69 per cent of taxpayers will save money on the tax payouts. The government, before proposing the taxation system in the budget, did an analysis of 5.78 crore taxpayers, Revenue Secretary Ajay Bhushan Pandey said. Among these taxpayers, 69 per cent would save on tax payouts, said Revenue Secretary. The union budget presented on February 1 introduced more tax slabs and cut rates at lower slabs, provided the taxpayer is ready to forego all the existing exemptions and deductions including home loan interest, other tax savings investments.
A table published by the Ministry of Finance showed that those earning Rs 15 lakh per year or more in taxable income, and claiming only Rs 200,000 deduction benefits under section 80(C) and the standard deduction would save Rs 15,000 per year by migrating to the new regime.
Finance Minister Nirmala Sitharaman had proposed that the new tax regime will be optional for the taxpayers. “An individual who is currently availing more deductions and exemption under the Income Tax Act may choose to avail them and continue to pay tax in the old regime,” Sitharaman said during her budget speech. Those earning up to Rs 5 lakh will not pay any tax either in the old regime or in the new regime. According to a PTI report, the government was in dilemma before introducing this “because it wanted to lower tax outgoes for the people and ensure that it eases the process of tax, but did not want to disturb the system due to which it made a beginning by giving people options.”
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Under the new income tax regime, those with an income of Rs 5 lakh to Rs 7.5 lakh, they will have to pay a reduced tax rate of 10 per cent. Similarly, taxpayers between Rs 7.5 lakh and Rs 10 lakh will have to pay 15 per cent and those between Rs 10 lakh and 12.5 lakh will pay 20 per cent. Those with salaries between Rs 12.5 lakh and 15 lakh will have to pay 25 per cent tax and above Rs 15 lakh, tax payable is 30 per cent.