India’s new tax regime which has been made the default tax regime with lower tax rates and lesser surcharge for the superrich will be beneficial for everyone earning more than Rs 15 lakhs, according to the head of the direct tax body.
“We think that at every level the shift will take place, up to Rs 7 lakh and Rs 7.5 lakh in case of salaried employees, the shift is definite. From Rs 7.5 lakh to Rs 15 lakh of income, depending on the income, he or she has to decide whether it is beneficial or not beneficial,” Nitin Gupta, chairperson of the Central Board of Direct Taxes told CNBC-TV18 in a post-budget interaction.
“Above Rs 15 lakhs, our calculation shows that it will beneficial to everyone. With the reduced surcharge above Rs 5 crore, definitely,” he added.
The government has been goading taxpayers to shift to its new tax regime which has lower tax rates but also far fewer exemptions. In the Budget 2023-24, it moved decisively to make the tax regime more attractive.
Under the revamped tax regime, individuals having income up to Rs 7 lakhs is proposed to be exempted through a tax rebate from the erstwhile threshold of INR 5 lakhs. This leads to a tax saving of Rs 33,800.
A standard deduction of Rs 50,000 from salary/pension and a prescribed deduction on family pension income is proposed to be allowed under the new regime.
Aforesaid proposed change in slab rate and the standard deduction will result in a tax saving of Rs 54,600 for salaried taxpayers having an income of Rs 15.5 lakhs, according to experts.
The highest surcharge rate was reduced from 37 percent to 25 percent under the new regime. This will reduce the effective tax rate for individuals in the highest tax slab from 42.744 percent to 39 percent.
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