Budget 2023: Not compelling anyone to shift from old to new tax regime, says Nirmala Sitharaman
New Delhi: Union Finance Minister Nirmala Sitharaman on Wednesday said the new taxation regime has now got greater incentives and attraction so that people can unhesitatingly move to it from the old regime. “We are not compelling anyone. But the new one is now attractive as it gives greater rebates,” Sitharaman said at the post-budget press conference. “This country has been waiting for direct taxation to be simplified. Therefore, the new taxation regime that we brought in for direct taxation two, three years ago has now got greater incentives and greater attraction so that people can unhesitatingly move from the old to the new,” she added. In her budget speech, the Finance Minister said that the government is also making the new income tax regime as the default tax regime. “However, citizens will continue to have the option to avail the benefit of the old tax regime.” The minister made major announcements in regard to personal income tax, saying these primarily benefit hard-working middle class. “The first one concerns rebate. Currently, those with income up to Rs 5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to Rs 7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs 7 lakh will not have to pay any tax,” she said. “The second proposal relates to middle-class individuals. I had introduced, in the year 2020, the new personal income tax regime with six income slabs starting from Rs 2.5 lakh. I propose to change the tax structure in this regime by reducing the number of slabs to five,” she added. The minister said this will provide major relief to all taxpayers in the new regime. An individual with an annual income of Rs 9 lakh will be required to pay only Rs 45,000. “This is only 5 percent of his or her income. It is a reduction of 25 percent on what he or she is required to pay now, ie, Rs 60,000. Similarly, an individual with an income of Rs 15 lakh would be required to pay only Rs 1.5 lakh or 10 percent of his or her income, a reduction of 20 percent from the existing liability of Rs 1,87,500. Referring to the highest tax rate which is 42.74 percent at present, the minister said this is among the highest in the world. “I propose to reduce the highest surcharge rate from 37 percent to 25 percent in the new tax regime. This would result in a reduction of the maximum tax rate to 39 percent,” the minister said in her budget speech. She said the limit of Rs 3 lakh for tax exemption on leave encashment on the retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was Rs 30,000 per month. “In line with the increase in government salaries, I am proposing to increase this limit to Rs 25 lakh.” New income tax slabs The Budget 2023-24 has proposed changes in the optional tax regime, which was introduced in 2020-21. As per the changes proposed in the Budget, no tax would be levied on people with an annual income of up to Rs 7 lakh but there will be no changes for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA. In what is being seen as a push for the salaried class to switch to the new tax regime where no exemptions on investments are provided, the finance minister in her Budget for 2023-24 allowed a standard deduction of Rs 50,000 under the new regime. The old tax regime provides for a similar deduction and no tax on income up to Rs 5 lakh. Budget’s four focal points During her interaction with the media, the Minister also referred to the budget taking care of the needs of Industrial Revolution 4.0. “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. “The Budget gives a big leg-up to capital investment, it also attends to MSMEs as they are the engine of growth, it sustains capital investment and also gives a push to the private sector while also giving tax reliefs to individuals and middle class,” the minister added. She said emphasis points of the budget include empowering women, action plan for tourism, initiatives for Vishvakarmas (artisans) and green growth. Asked about benefits for households, the minister said there is “a decline in the price of wheat due to the intervention by the government before the Budget and this will in a way bring a relief to the housewife of every household.” The minister said in her budget speech that Deendayal Antyodaya Yojana National Rural Livelihood Mission has achieved remarkable success by mobilising rural women into 81 lakh self-help groups. “We will enable these groups to reach the next stage of economic empowerment through the formation of large producer enterprises or collectives with each having several thousand members and managed professionally,” the minister said. With inputs from agencies Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook , Twitter and Instagram .