Income Tax Alert: According to the news agency PTI, the Government of India is planning a new exemption-free tax regime soon to make it more attractive for individual income tax payers. According to insiders, the administration intends to eventually introduce a tax-free tax system without any exemptions. Along with this, the complicated old tax regime with exemptions and deductions will be done away with.
Let us tell you, tax exemption in India is classified on the basis of the type of income. Agricultural income, pension, allowances and other forms of income are not included. There is another possibility of deduction of tax at source.
Tax exemption is an arrangement that reduces taxable income. You may be excluded from paying taxes in full, at reduced rates, or entirely on a portion of your earnings. Rather than the absence of taxation in specific cases, tax exemption is a statutory exception to a general rule. Tax credits are given to encourage certain economic activities.
Significantly, a new tax structure was implemented in the Union Budget 2020-21. Taxpayers were given the option to choose between the previous system, which had separate deductions and exemptions, and the new regime, which included lower tax rates but no exemptions or deductions.
The change was aimed at simplifying the income tax law as well as providing substantial assistance to individual taxpayers.
When asked about the experience of the new tax regime, sources indicated that there is clear evidence that those who have completed their home and education loans are eager to move to the new tax regime as they have There is no exemption to claim.
According to sources, the reduction in taxes in the new system will make the new tax system more attractive.
In September 2019, a comparable tax structure was implemented for business taxpayers, with much lower rates and fewer exemptions.
The government announced a reduction in the base corporation tax rate from 30% to 22% for existing companies, and from 25% to 15% for new manufacturing enterprises formed after October 1, 2019 and starting operations before March 31, 2024. announced a reduction. Companies opting for these higher tax rates will have to forego all exemptions and incentives.
Under the new tax regime for individual taxpayers announced on February 1, 2020, people with annual income up to Rs 2,50,000 do not pay any tax.
The tax rate is 5 per cent for income between Rs 2,50,000 to Rs 5,00,000.
Also, those earning between Rs. 50000 and Rs. 7,50000 have to pay a tax rate of 10%; Those earning between Rs 7,50000 to Rs 10,000 are paid tax at the rate of 15%; Those earning between Rs.100000 to Rs.12,500,000 have to pay tax at the rate of 20%; Those earning between Rs.12,500,000 to Rs.1500000 have to pay a tax rate of 25%; And those earning more than Rs 1500000 have to pay 30% tax rate.
