Finance Minister Nirmala Sitharaman presented the Union Budget for the financial year 2024-25 on July 23, where the government made further changes to the new tax regime while leaving the old tax system untouched. This move, along with a recent statement by the Revenue Secretary, has sparked fresh debates.
Currently, taxpayers in the country have the option of filing their income tax returns under two different tax regimes. The latest budget presented by Finance Minister Sitharaman included various changes to make the new tax regime more attractive, but the old system was left unchanged. The Modi government introduced the new tax regime during its second term and has been actively encouraging taxpayers to switch to it. Despite this, the old tax regime remains in place, raising questions about its future.
Revenue Secretary Sanjay Malhotra has fueled new discussions by suggesting the potential for a "one country, one income tax system." He stated that the country should have only one income tax regime. Malhotra noted that for the assessment year 2024-25, 70% of taxpayers filed their income tax returns under the new regime. Speaking at a post-budget session at the PHD House of Commerce and Industry, he emphasized that while the old and new tax systems currently coexist, the aim should be to have a single system.
In addition to this, the Finance Minister announced a review of the Income Tax Act of 1961, which is expected to take about six months. Malhotra described the task of reviewing this comprehensive 1600-page law as a significant challenge.
Furthermore, the budget included changes to the long-term capital gains tax on the sale of property. The government removed the benefit of indexation for calculating long-term capital gains tax but reduced the rate from 20% to 12.5%, similar to the rate on equity. This change has raised concerns that the tax burden on property sellers may increase, leading to dissatisfaction among various groups.
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