Union Finance Minister Nirmala Sitharaman said on Sunday that the introduction of second alternative tax brackets without exemptions is meant to take the country towards a “simplified, exemption-free and reduced rate of tax regime”, PTI reported. However, she added that the Centre had not set any time frame to remove exemptions.
“At the moment we only started a second alternative with some exemptions removed or some exemptions included, although the original intention was to remove all exemptions and give a clear simplified reduced rate of income tax,” the minister said. “We have not made up our minds as yet. “We are trying step by step, move forward and no particular timeline given.”
Presenting the 2020-’21 Union Budget on February 1, Sitharaman introduced more tax slabs and offered higher limits to taxpayers as long as they agree to forgo all exemptions and deductions which lead to tax savings. In a post-budget press conference, the finance minister had said that the government plans to get rid of all exemptions in the long run.
On Sunday, Sitharaman told reporters in New Delhi that around 69% of taxpayers would have benefited and probably 11% “attracted” had the new tax regime been introduced last year.
Individual taxpayers can opt for new rates only if they give up almost all exemptions and deductions they enjoy under the current regime.
Under the optional new tax regime, those earning between Rs 5 lakh and Rs 7.5 lakh annually will now be taxed at 10%, down from the existing rate of 20%, the finance minister announced. Taxpayers in the Rs 7.5 lakh and Rs 10 lakh bracket will be charged at 15% instead of the current 20%, and those earning between Rs 10 lakh and Rs 12.5 lakh will have to pay income tax at 20% – reduced from the existing 30% rate.
Taxpayers earning Rs 12.5 lakh to Rs 15 lakh will be charged at 25% from the current tax rate of 30%. However, those earning beyond Rs 15 lakh will continue to be charged at Rs 30%.
Supreme Court order to telecom companies
When asked about the Supreme Court’s order to telecom firms to pay 1.47 lakh crore to the government as dues under the expanded definition of revenue, Sitharaman said it is not appropriate for her to comment on the matter as the “concerned ministry” is looking into it. The Department of Telecommunications had directed telecom companies on Saturday to pay their dues by midnight.
Sitharaman also denied the allegations of the Telangana government that the Centre has reduced the revenue devolved to states. She said the allocations are made as per the recommendations of the Finance Commission.