Budget adopts an ‘optimal approach’ in tax slab rejig, says CBDT chairman

Central Board of Direct Taxes (CBDT) Chairman Ravi Agrawal

With the Union Budget 2024-25 recasting the tax slabs that would result in savings of Rs 17,500 for the middle class, Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal said the government adopted an "optimal approach" which will benefit 65 percent of the taxpayers who have moved to the new regime.

“This budget has increased the lower tax slabs to Rs 3-7 lakh and Rs 7-10 lakh. The old tax regime has higher rates. All in all, we feel an optimal approach has been adopted, which will benefit all the taxpayers,” Agarwal told Moneycontrol in an interview.

While the tax slabs were rejigged for the new tax regime, the old tax regime rates were left untouched in the Budget.

“People are coming and adopting the new tax regime. As much as 65 percent taxpayers across have adopted the new tax regime, people are finding it beneficial,” he said.

The standard deduction for salaried employees was also increased from Rs 50,000 to Rs 75,000. The government will have to forego revenue of Rs 29,000 crore in direct taxes.

The Finance Minister Nirmala Sitharaman in the post-budget press conference said that the government has not decided if there will be a sunset date for phasing out the old tax regime. "I cannot comment on it right now," she said.

She also promised measures to simplify tax regime for individual income tax-payers, in line with measures taken over the years, especially introduction of the new, simplified tax regime.

Sitharaman said that the finance ministry will undertake a comprehensive review of the Income Tax Act to ensure that it is easy to understand, which will reduce the scope for disputes and litigations. The process is expected to be completed in six months.