India’s Finance Minister, Nirmala Sitharaman, has confirmed there will be no tax rate reductions under the old regime. Speaking at a recent event, she emphasized that taxpayers have the freedom to choose between the old and new tax systems, with no pressure to switch.
Simplifying Direct Taxes Since 2019 💼
Sitharaman reiterated the government’s ongoing efforts to simplify direct taxation. Since the introduction of the new tax regime in 2019, the focus has been on providing lower tax rates and increasing the standard deduction to ₹75,000 under the new system. Despite the changes, taxpayers who prefer exemptions and deductions can still opt to stay with the old regime.
“We’re not compelling anyone to move,” she said, noting that over 78% of taxpayers have already switched to the new regime, which has more streamlined rates and benefits.
Old Regime Stays Unchanged 🧾
While acknowledging requests to extend some of the new regime’s benefits to the old system, Sitharaman clarified that the government has chosen to keep changes specific to the new scheme. The finance minister highlighted that the introduction of standard deductions in the new regime was based on public feedback, ensuring that taxpayer needs are met.
Which Regime Works Best? 🤔
For those earning above ₹15,00,000 annually, the old tax regime might still offer advantages, particularly with the ability to claim exemptions like HRA and LTA. In contrast, individuals with gross income up to ₹7,75,000 might find the new tax regime more beneficial due to the higher standard deduction and rebates, which can result in zero tax liability.
The government’s continued push for simplification means more choices for taxpayers, with both regimes offering specific benefits depending on individual financial situations. While the old regime remains unchanged, the new system offers greater efficiency for many, particularly in lower tax brackets.
Which regime do you think suits you best? Let us know!
Quinn Coyote