Union Finance Minister Nirmala Sitharaman Saturday said the government intends to remove all Income-Tax exemptions in the long run. The announcement came at a press conference she addressed shortly after announcing reduction in income tax rates in her Budget speech. However, the rider is the tax payer can avail the new tax rates only on the condition they give up exemptions and deductions.
Under the new tax regime, individuals or HUFs opting for taxation under the newly inserted section 115BAC of the IT Act shall not be entitled to exemptions for leave travel, house rent, among others.
As per the new tax rates, income under Rs 2.5 per annum will remain untaxable as it was earlier. A tax of 5% will now be charged on income between Rs 2.5 to Rs 5 lakh.
Those earning between Rs 5 – Rs 7.5 lakh per annum will now pay 10 per cent tax on their incomes which were earlier 20 per cent.
The Finance Minister proposed a cut of 5 per cent from the existing 20 % for those earning between Rs 7.5 lakh to Rs 10 lakh per annum. They will now have to pay 15 per cent tax.
Sitharaman announced that those earning between Rs 10 lakh to Rs 12.5 lakh per annum will now have to pay 20 per cent tax. Earlier it was 30 per cent.
The new tax rate applicable to those earning in the range of Rs 12.5 lakh per annum to Rs 15 lakh per annum will be liable to pay tax at the rate of 25 per cent. As per the new tax regime, 30 per cent tax will be charged on salaries above Rs 15 lakh per annum.
Speaking at the press conference after presenting her second budget in the Lok Sabha, she said income tax cuts follow reduction in corporate tax rates in September last year.
The finance minister said improvement in revenue generation gives hopes of lowering fiscal deficit to 3.5 per cent of GDP in the next fiscal from 3.8 per cent in the current.
Disinvestment Secretary T K Pandey said big ticket stake sale will happen in the next few months and that he was confident of achieving the Rs 2.10 lakh crore target set for the next financial year.
He said an expression of interest (EoI) for sale of government stake in Bharat Petroleum Corp Ltd (BPCL) will be issued shortly.
The Cabinet had approved sale of government stake in BPCL in November last year.
with PTI inputs
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