The Union Government has kept the interests of the middle class in mind while formulating tax rates, and is constantly trying to keep it simpler while giving more options to them via the new tax regime, Finance Minister Nirmala Sitharaman said on September 16.
“Since 2019, the attempt has been to simply direct taxation. Attempt has been to make the process simpler, which is why a new regime was brought in and rates kept low. We gave the option to assessees that if they want exemptions, they could continue with the old scheme,” Sitharaman said at the News18 India Chaupal event.
While the new tax regime scheme was without any exemptions, the government later added standard deductions after hearing the people, Sitharaman added.
During the July Budget, the government had more discussions and brought tax rates further down for the middle class, while also increasing the Standard Deduction, the minister said.
"So if anything, keeping the middle class in mind, PM had said rates be brought down. We have kept the middle class in mind," Sitharaman added.
During the July Budget, income-tax slabs were slightly changed at the lower end, and tax rebate earned on an income of up to Rs 7 lakh also remained. To be sure, these changes happened only in the new income tax regime. The old tax regime remained unchanged.
In addition, the the FM hiked the standard deduction to Rs 75,000, up from Rs 50,000 earlier. Again, this is available only for those who opt for the new income-tax regime.
Meanwhile, more than 70 percent of people have moved to the new regime without any compulsions, Sitharaman added on September 16.
"Tax slabs in the new regime will apply to everyone who opts for the scheme regardless of their incomes, and those drawing salaries also benefit from it. We are carefully looking at each option before applying it.," she said.
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