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We expect majority of people to shift to the new income tax regime after budget incentives: Finance Secretary
New Delhi: The salaried common man would benefit from the new income tax regime announced in the Union budget 2023-24, said finance secretary TV Somanathan.
"The vast majority of people will benefit and we expect that the majority of people will shift to the new income tax regime. We are confident of that," said Somanathan in an exclusive interview with ANI. Somanathan said there are only winners in the new income tax regime, no one is a loser. "I am confident that people will choose the new income tax regime. Today's situation is that if someone's income is up to five lakhs, then they do not have to pay tax. From the next year, those whose income is up to Rs seven lakhs will not have to pay tax. This limit has been increased by 40 percent which was Rs 5 lakh earlier. This is absolutely beneficial. Government jobs or private, whose monthly salary is 40,000 to 60,000, they come in this bracket. For them, there is only profit. Those who are saying that it is not beneficial, are wrong.
Somnathan said that people say that in the old system, there was an exemption of Rs 1.5 lakhs under 80C. There was an exemption of Rs 50,000 in the pension scheme. It is true that there was an exemption of two lakhs in the housing loan but look at it from the point of view of those whose income is less than Rs 10 lakhs. Are those people able to save that much? Not at all.
"If the family's income is Rs 9 lakh annually, it has to pay children's fees, travel expenses, celebrate festivals. He cannot save at all. It is theoretical that if he had saved then the tax would have been less, this is a theoretical thing for most lower-income people. In fact, the people who save so much are mostly people from the high-income group," he added.
"Those who earn Rs 20-30 lakh rupees annually, they take full advantage of 80C, housing tax exemption, because they have enough money to save even after consumption and take advantage of the exemption, but those people like government drivers or MTS, they cannot use the combination because their income is so much that they cannot save. Finance Secretary said that the old tag system is so complicated that you have to hire a chartered accountant to file return.
Secretary said that in new tax regime people have option of switching. If new is beneficial for you then go on, if not than you can switch to the old tax regime. There is facility to switch from old to new and new to old tax regime if you have not an income from business. If you are a businessman, you will get a chance to opt old to new and switch to new to old tax regime. But salaried class can every year choose the tax regime that they want to go.
He said that earlier people were busy in preparing fake rent receipts, stopping payment of insurance policies as they were doing this for tax saving which is a cost to the poor man. Why was he doing is because he is not able to afford insurance policy actually. But to get the tax benefit he was buying insurance policy and later closes the insurance. He loses that money which he gave as a premium.
Responding to the criticism of reducing budget allocation for govt flagship MGNREGA scheme, Somanathan said that MGNREGA is a demand-based scheme. This is employment guarantee scheme. Allocation for Jal Jeevan Mission and Pradhanmantri Gramin Awas Yojna has been increased. Rs 10000 cr has been allocated for Jal Jeevan Mission and Rs 30, 000 cr has been allocated for Pradhanmantri Gramin Awas Yojna. Rs 40,000 crore allocation is increased where MGNREGA work done. Most of the people who work in MGNREGA they also work in Jal Jeevan Mission and Pradhanmantri Gramin Awas Yojna.
Somanathan said that we believe that employment opportunity created by Jal Jeevan Mission and Pradhanmantri Gramin Awas Yojna will reduce the demand of MGNREGA .
Elaborating, the Finance Secretary said that secondly we have come out of pandemic. Economy is picking. Activities are back to normal. Overall employment situation is improving so be believe that this will reduce the demand. This s the reason we had reduced the MGNREGA budget to Rs 60,000 cr. But if the actual demand is more than the allocated budget we can increase in revised estimate.
Finance Secretary said that Customs duty has been reduced on mobile and TV parts to promote Make in India initiative. India manufactures and exports mobile phones in very large numbers, but it still imports components of mobile and TV which still needs to be imported. Customs duty has been reduced to make component cheaper. It will boost manufacturing and in long run it will benefit consumers as well as they will have more choices and rate will also reduce.
The income tax rebate limit available for salaried and individual taxpayers under the new income tax regime has been hiked to Rs 7 lakh from the present Rs 5 lakh. Finance Minister has announced 5 slabs in the new income tax regime.
Up to Rs 3 lakh income there is 0pc or NIL tax. From Rs 3 lakh to Rs 6 lakh the tax rate is 5pc. From Rs 6 lakh to Rs 9 lakh the tax rate is 10pc.
From Rs 9 lakh to Rs 12 lakh the tax rate is 15pc. From Rs 12 lakh to Rs 15 lakh the tax rate is 20pc. (ANI)