New tax regime SWEETENED to benefit taxpayers: CBDT

With the announcement of the Union Budget 2023, the Central Board of Direct Taxes (CBDT ) Chairman Nitin Gupta said the new income tax regime for filing returns has been 'sweetened'.

While announcing the new slabs and rates under the new tax regime, Gupta claimed that the government intended to eventually "do away with deductions and exemptions" in order to satisfy the "long-standing demand of lowering of taxes for individual taxpayers and companies."

In the Budget statement yesterday, Finance Minister Nirmala Sitharaman said that the government has changed the structure of the new income tax system in a significant way to boost the middle class by making it more appealing to taxpayers.

The new tax law for individuals was established two years ago, said the CBDT Chairman, but "the benefits were not percolating and now the government has altered the tax slabs and benefit is now plainly obvious."

"The new regime is really sweetened...the portion of taxpayers who will not benefit will be a very small portion who is taking all kinds of benefits in terms of the interest in the house property, the deductions under section VIA, among others, and only that type of taxpayers could be impacted in terms of they would be better off in the old regime."

The standard deduction has been made available in the new regime, thus in terms of parity it has been established, according to the CBDT Chairman. There are around 3.5 crore salaried taxpayers in India. If they choose the new regime, they will be at parity with the previous regime.

"The advantage will be trickling to everyone now with the fewer slabs and bigger slabs, and the long-standing desire for lowering of taxes will be realised," he said.

As per the Budget 2023 announcement,  those with an annual income of up to Rs. 7 lakh would not be subject to taxation under the new tax system, but it made no changes for those who continued to be subject to the previous system, which allowed for tax exemptions and deductions for investments as well as expenses like HRA.

For income up to Rs. 3 lakh, no tax would be assessed under the newly revised tax system. Income between Rs. 3-6 lakh would be subject to a 5% tax; Rs. 6-9 lakh to a 10% tax; Rs. 9-12 lakh to a 15% tax; Rs. 12-15 lakh to a 20% tax; and Rs. 15 lakh and above to a 30% tax.

The required payment for someone making Rs 9 lakh will be just Rs 45,000. Only 5% of his or her income comes from this. It is a drop of 25% from the Rs 60,000 that is currently due under the previous regime.

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