The idea behind introducing second alternative tax slabs sans exemptions is to take the country towards “a simplified, exemption-free and reduced rate of tax regime”, Union Finance Minister Nirmala Sitharaman said on Sunday. She, however, added that there was no timeframe set by the government to remove all exemptions.
“At the moment we only started a second alternative with some exemptions removed or some exemptions included, although the original intention was to remove all exemptions and give a clear simplified reduced rate of income tax,” Sitharaman was quoted as saying by news agency PTI.
“We have not made up our minds as yet (on the removal of all exemptions)… We are trying step by step, move forward and no particular timeline given,” she said when asked if there is any timeframe for removing all income tax exemptions,” she added.
The Union Budget 2020-21 introduced two more tax slabs and offers higher limits if the taxpayer is ready to forego all the existing exemptions and deductions including home loan interest, other tax savings investments.
Addressing a post-budget press conference on February 1, Sitharaman had announced that the government intended to remove all income tax exemptions in the long run.
On Sunday, she informed that based on simulation and assumption, 69 per cent of taxpayers would have benefitted and probably 11 per cent would have been “attracted” had the new tax regime been introduced a year before.
(With inputs from PTI)
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