The intent of the government is to simplify direct taxation regime, for which the new tax regime has been brought in, there is no other incentive behind this, it is the taxpayer who has to choose which regime to go for, Sitharaman said during a post-budget interaction with stakeholders in Mumbai.
Nirmala Sitharaman has told media outlets that she believes 50% taxpayers will opt for the revamped new income tax regime.
Top finance ministry officials are betting on luring Indians’ trust to the new income tax regime, after Budget proposed higher tax exemptions to raise appeal of the new default option that was largely shunned by taxpayers.
The revised new tax regime offers a higher tax exemption, raises the threshold for tax rebate and reduces the surcharge for the super rich.
Revenue Secretary Sanjay Malhotra told ET, the government is confident that at least half of taxpayers will shift to the new income-tax regime that has been made more attractive in the latest budget.
“Taxpayers’ response (to the new scheme) was poor and that is why we have made it more attractive. We are confident that at least 50% of taxpayers should shift (to the new regime). And I am being conservative here,” Malhotra said.India’s Budget for the next fiscal year starting April 1 pushed for greater adoption of the new tax regime in a big way by reducing the number of tax slabs, increasing the basic exemption limit to Rs.3 lakh from Rs.2.5 lakh, raising the threshold for full tax rebate and lowering the surcharge for incomes above Rs.5 crore.
Finance Ministry data showed about one crore individuals in the Rs 5-7 lakh income range can gain from the government’s decision to increase the rebate level to Rs 7 lakh under the new tax regime.
Many of these individuals are unable to use the benefits available for investment in specified savings instruments, such as public provident fund or 5-year fixed deposits, increasing their tax liability, government sources told TOI.
There are more than six crore taxpayers in India and now individuals with income above Rs 3 lakh, even if they do not have any liability, are also required to file returns. As of March 2022, close to 6.4 crore returns were filed by individuals.