In view of the rising inflation, the government is preparing to give a big blow to the taxpayers. The old tax system can be abolished, in which 70 types of exemption are available. Revenue Secretary Tarun Bajaj says that there is a need to reduce the attraction of taxpayers towards the old system of income tax. This will encourage more people to adopt the new system of income tax.
The new system of income tax was started in 2020. Even though the tax rate is low in this, but the facility of deduction is not available. Due to lack of exemption, taxpayers have not shown interest in the new tax system. Most of the taxpayers file their income tax returns with the old tax regime.
New tax slab came in 2020-21
The government had introduced a new system of tax in the budget of the financial year 2020-21. It was said that this system of tax is very easy. For individual taxpayers, the tax rate is lower in this. But, they do not get the facility of standard deduction and section 80C. The tax burden is reduced with the convenience of standard deduction and section 80C.
No tax on 5 lakhs
Under the new system, taxpayers with an annual income of Rs 5 to 7.5 lakh have to pay 10 percent tax. In the old system, 20 percent tax has to be paid on this income. However, due to rebate under section 87A, people earning up to Rs 5 lakh annually do not have to pay any tax under the new or old regime.
No tax on earning 8.5 lakhs
Bajaj said that the government had introduced a new system to bring down personal income tax. But, very few people have shown interest in it. The reason for this is that people think that in some system they will pay less tax by even Rs 50, then they want to use the same system. People with an annual income of 8-8.5 lakhs using 80C and standard deduction in the country do not have to pay any tax.
That’s why people don’t choose new slab
He said that this is the reason why people do not want to use the new system. Therefore, unless we reduce the attractiveness of the old system, people will not come to adopt the new system. Unless we do this, we will not be able to ease our tax rate.
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