The Union Budget 2020-21 had introduced a new tax regime wherein taxpayers were given the option to choose between the old regime with various deductions and exemptions and the new tax regime that offered lower tax rates without exemptions and deductions.
Read More : EPFO: Know benefits given to widow/widower or children under the EPS’95 scheme – details
New Delhi: In a bid to provide significant relief to the individual taxpayers and to simplify the income-tax law, the finance ministry is reportedly working to revise the two-year-old exemptions-free personal IT regime by offering lower tax rates. Quoting a government source, a leading business portal reported that the government aims to establish a system where there are no exemptions and the complex old tax regime with exemptions and deductions is terminated
A similar tax regime for corporate taxpayers was introduced in September 2019 by significantly lowering rates and removing exemptions. The government had announced a cut in base corporate tax for then existing companies to 22 per cent from 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019, and starting operations before March 31, 2024, to 15 per cent from 25 per cent. Companies opting for these new tax rates will have to forego all exemptions and incentives.
Besides, the government may also phase out the older personal income tax regime, which offers several deductions and benefits.
Read More : US sees India as its indispensable partner: White House
NEW TAX REGIME vs OLD TAX REGIME
For the unversed, the Union Budget 2020-21 had introduced a new tax regime wherein taxpayers were given the option to choose between the old regime with various deductions and exemptions and the new tax regime that offered lower tax rates without exemptions and deductions.
Under the new tax regime for individual taxpayers announced on February 1, 2020, people with an annual income of up to Rs 2.5 lakh do not pay any tax. For income between Rs 2.5 lakh to 5 lakh, the tax rate is 5 per cent. Further, those with an income of Rs 5 lakh to Rs 7.5 lakh have to pay a reduced tax rate of 10 per cent; between Rs 7.5 lakh and Rs 10 lakh 15 per cent; between Rs 10 lakh and 12.5 lakh 20 per cent; between Rs 12.5 lakh and 15 lakh 25 per cent; and above Rs 15 lakh 30 per cent.
