• Notification Date: 19-01-2022
• Notification No: N/A

Government offers Incentives for New Income Tax Regime

The government decided that the optional income tax regime with the lower tax rate, without the exemption, which was announced in 2020. Most of the people still want to continue with the older regime. But the individual taxpayers have not been facilitated with these benefits. The finance ministry is looking into the matter. They might receive incentives to move to a new tax regime.

Finance Minister Nirmala Sitharaman has announced on 1 February 2020 that the individual taxpayers will also have similar facilities of reduced income tax rates. This rule is especially applicable for those taxpayers who are willing to avoid deductions and exemptions.

But this new provision of the exemption-free regime with a low rate of tax is not a good option for the individual taxpayers. Due to the lack of an independent social security system, burden of income tax return filings, and increased relevance of medical insurance policies in the pandemic situation, there has not been a great response to this new regime. According to some taxpayers, this new regime is rigid for the taxpayers. Section 115BAC of the Income Tax Act refers to a new tax regime without exemption.

The Ministry of Finance, the revenue department, and the Central Board of Direct Taxes (CBDT) have not replied to any of the queries regarding this issue.

According to the deputy general manager of Taxmann, Mr. Naveen Wadhwa, the new tax regime can be made more effective by increasing the basic exemption limit to 2.5lakh rupees for both regimes.