Finance Minister Nirmala Sitharaman, who presented her 5th budget in the Parliament, said the is moving along to become USD 5 trillion economy at the post-Budget press conference on Wednesday.
Her Budget announcement drew a mixed-bag reaction from across the different sectors.
The Finance Minister said the government has made the new income tax regime more attractive for taxpayers and has thus brought about 'substantial changes' in its structure for the benefit of the middle class. The Budget 2023-24 has proposed changes in the optional tax regime, which was introduced in 2020-21.
Speaking to reporters after presentation of the Budget, Sitharaman said the country has been waiting for a direct tax regime which is simplified and easy in compliance.
"The personal income tax has had substantial changes (in the Budget) which will benefit the middle class. The new taxation regime has now got greater traction and incentive so that people can now unhesitatingly move to the new regime from old," the finance minister said.
As per the changes proposed in the Budget, no tax would be levied on people with annual income of up to Rs 7 lakh under the new tax regime but it made no changes for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA.
In what is being seen as a push for the salaried class to switch to the new tax regime where no exemptions on investments are provided, the finance minister in her Budget for 2023-24 allowed a standard deduction of Rs 50,000 under the new regime.
The old tax regime provides for a similar deduction and no tax on income up to Rs 5 lakh.
Sitharaman said the government wants to make the new tax regime attractive enough and compliance should not be burdensome on taxpayers. However, if someone feels the old regime is more beneficial, he/she can continue in it.
"The ultimate interest is to make the simpler (new) regime more attractive," Sitharaman said.
Revenue Secretary Sanjay Malhotra said majority of individual taxpayers would find it more attractive to shift to the new regime.
Malhotra, however, did not give details on the number of taxpayers who have migrated to new tax regime since 2020-21.
Under the revamped new tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5 per cent; Rs 6-9 lakh at 10 per cent, Rs 9-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent. "I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500," Sitharaman said.
(With PTI input)
Also Read: Budget 2023: Govt increases income tax rebate to Rs 7 lakh per annum | 5 major announcements