Union Finance Minister Nirmala Sitharaman said on Wednesday that the new taxation regime now has more incentives and appeal, allowing people to switch from the old regime without hesitation.
“No one is being compelled. “However, the new one is more appealing because it offers larger rebates,” Sitharaman said at the post-budget press conference.”This country has been waiting for the simplification of direct taxation. As a result, the new taxation regime that we implemented for direct taxation two or three years ago now has greater incentives and appeal, allowing people to move from the old to the new without hesitation.”
The Finance Minister stated in her budget speech that the government is also making the new income tax regime the default tax regime. “However, citizens will still be able to take advantage of the old tax regime.”The minister made five major announcements concerning personal income tax, claiming that they will primarily benefit the hardworking middle class.
“The first is about rebate. Individuals earning up to Rs 5 lakh are currently exempt from paying income tax under both the old and new tax regimes. In the new tax regime, I propose increasing the rebate limit to Rs 7 lakh. Thus, under the new tax regime, individuals earning up to Rs 7 lakh will not have to pay any tax,” she explained.”The second proposal is for middle-class people. In the year 2020, I introduced a new personal income tax regime with six income slabs starting at Rs 2.5 lakh. “I propose changing the tax structure in this regime by reducing the number of slabs to five,” she added.
According to the minister, this will provide significant relief to all taxpayers under the new regime. A person with a yearly income of Rs 9 lakh will be required to pay only Rs 45,000. “This is only 5% of his or her income. It is a 25% reduction from what he or she is required to pay now, i.e. Rs 60,000. Similarly, an individual earning Rs 15 lakh would be required to pay only Rs 1.5 lakh, or 10% of his or her income, a 20% reduction from the existing liability of Rs 1,87,500.
The minister proposed extending the benefit of 34 standard deductions to the salaried class and pensioners, including family pensioners, under the new tax regime. “Each salaried person earning Rs 15.5 lakh or more will thus benefit by Rs 52,500.” The minister stated that the highest tax rate, which is currently 42.74 percent, is among the highest in the world.
“In the new tax regime, I propose lowering the highest surcharge rate from 37% to 25%. “As a result, the maximum tax rate would be reduced to 39%,” the minister stated in her budget speech. She stated that the Rs 3 lakh limit for tax exemption on leave encashment on retirement of non-government salaried employees was last set in 2002, when the highest monthly basic pay in the government was Rs 30,000.
“In keeping with the increase in government salaries, I propose raising this limit to Rs 25 lakh.” During her interaction with the media, the Minister also mentioned the budget for Industrial Revolution 4.0 needs. “We are looking at a futuristic fintech sector, people will be trained through Industrial Revolution 4.0, we are trying to unleash digital economy in various walks of life.
“There has been a significant increase in agricultural credit availability. A total of Rs 20 lakh is available for agricultural credit. In addition, a sub-scheme under the PM Matsya Sampada Yojana ensures that people living in coastal areas will benefit,” she explained. “The Budget provides a significant boost to capital investment, it also addresses MSMEs as the engine of growth, it sustains capital investment, and it also provides a boost to the private sector while also providing tax relief to individuals and the middle class,” the minister added.
She stated that the budget’s emphasis points include empowering women, a tourism action plan, initiatives for Vishvakarmas (artisans), and green growth. When asked about household benefits, the minister stated that there is “a decline in the price of wheat due to the government’s intervention before the Budget, and this will in a way bring relief to the housewife of every household.”
In her budget speech, the minister stated that the Deendayal Antyodaya Yojana National Rural Livelihood Mission had achieved remarkable success by mobilising 81 lakh self-help groups among rural women.”We will enable these groups to advance to the next stage of economic empowerment by forming large producer enterprises or collectives, each with several thousand members and professionally managed,” the minister said.
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