Finance Minister Nirmala Sitharaman has said that the government brought an alternative income tax system with seven tax slabs so that people belonging to lower income groups have to pay less tax.
Finance Minister Nirmala Sitharaman has said on Friday that the government brought an alternative income tax system with seven tax slabs so that people in the lower income group have to pay less tax. Sitharaman said that in the old tax regime, every taxpayer can claim about 7-10 per cent exemption and depending on the income limit, the income tax rates are between 10, 20 and 30 per cent. The minister said that along with the old tax system, the government has come up with an alternative system, which does not have any exemptions, but is simpler and has lower tax rates.
More slabs for people with low income: Sitharaman
Sitharaman said that she had to make seven slabs so that there would be lower rates for the people of low income group. She was speaking on the occasion of the release of the book ‘Reform Nation’ by Gautam Chikramane, Vice President of Observer Research Foundation.
The government had introduced the Alternative Income Tax regime in the General Budget 2020-21, under which individuals and Hindu Undivided Families (HUFs) were taxed at a lower rate. However, other tax exemptions like rent allowance, home loan interest and investment under 80C are not given in this arrangement.
Under this, the total income up to Rs 2.5 lakh is tax free. After this, five per cent on total income from Rs 2.5 lakh to Rs 5 lakh, 10 per cent on total income from Rs 5 lakh to Rs 7.5 lakh, 15 per cent on income from Rs 7.5 lakh to Rs 10 lakh, from Rs 10 lakh Income up to Rs 12.5 lakh is taxed at 20 per cent, income from Rs 12.5 lakh to Rs 15 lakh is taxed at 25 per cent and income above Rs 15 lakh is taxed at 30 per cent.
What are the rates under the old regime?
Even under the old tax system, income up to Rs 2.5 lakh is tax free. After this, five per cent tax is levied on income between Rs 2.5 lakh and Rs 5 lakh. Whereas, between Rs 5 lakh and Rs 10 lakh, 20 per cent tax is levied. After this, income above Rs 10 lakh is taxed at 30 per cent.
Sitharaman has said that the benefits of the old tax system have not been removed, rather the new exemption-free tax system is an alternative form of the income tax return system. The minister further said that in order to eliminate harassment, the tax department has made arrangements for faceless assessment of income tax returns.
