new tax system
Every citizen of the country is awaiting the presentation of the general budget in Parliament on July 23. The general public is eagerly waiting for Finance Minister Nirmala Sitharaman’s announcements on taxation. The middle-class family wants the government to announce a tax waiver so that they can reduce their financial burden. Taxpayers have been demanding changes in the new tax regime for a long time, so it remains to be seen whether the Finance Minister makes any announcement in this regard in the budget to be released for the financial year 2024-25 or not. So, how will the general public benefit?
What is the new tax regime?
The new tax regime, also known as the concessional tax regime, is described by the government as better for individual taxpayers than the old tax regime as it offers lower tax rates. From FY 2023-24, the government has made the new tax regime the default one i.e. if an individual does not choose any tax regime, he/she will automatically join the new tax regime. However, many employees opt for the old tax regime to avail HRA exemption, 80C deduction, etc. The benefits of the facilities provided under the old tax regime are not available under the new tax regime.
What is the demand of taxpayers?
Mohit Saxena, who works in an IT company, says that in the new tax system, the benefit of higher income tax deduction should be given to salaried people. Currently, there is no exemption for deduction under sections like 80C or 80D, the government should pay attention to this. Especially, the benefit of tax deduction should be given to contributions up to Rs 50,000 to Employees Provident Fund (EPF) under Section 80C and NPS under Section (1b), this will help people save more for retirement.
What is the government focusing on?
For the past few years, the government has been paying more attention to expanding the scope of NPS and the new personal tax regime. In such a situation, it is believed that the government will focus on these issues in this year’s general budget as well. Therefore, many important announcements can be made to make both the schemes more attractive. Currently, a voluntary contribution of Rs 50,000 under Section 80CCD(1B) provides the benefit of additional tax deduction under the old tax regime, but the new tax regime also does not have such a rule. According to sources, the government may consider allowing this deduction under the new tax system in this general budget as well. With this, taxpayers will get the benefit of additional deduction. Also, there will be more investment in retirement schemes. This will promote the new tax system.
