FM Sitharaman Confirms No Tax Rate Reductions for Old Tax Regime

In a recent address at an event, Finance Minister Nirmala Sitharaman reaffirmed that the government will not be reducing tax rates under the old tax regime. This statement comes in response to ongoing calls from taxpayers for similar rate reductions in both the old and new tax regimes.

Sitharaman was very clear that the taxpayers are not being compelled to opt for this new regime from the previous one. "We are not compelling anyone to move," she said, highlighting that over 78% of taxpayers have already opted for the new regime. This new system was introduced to simplify direct taxation and ease compliance for individuals.

In a bid to make the new regime attractive, the government has reduced the taxes and even raised the limit of the standard deductions to Rs 75,000 for middle-class individuals. Despite these adjustments, the old regime remains unchanged in terms of tax rates and deductions.

"We introduced the standard deduction in the new regime after listening to public feedback," FM Sitharaman stated. Although some middle-class taxpayers have expressed concerns that rate cuts in the new system should apply to the old regime as well, the Finance Minister reiterated the government's stance. "I understand the view that some rate reductions in the new system should apply to the old regime, but we have kept the changes specific to the new scheme," she stated.

 

 

 

 

 

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To further elaborate, Sitharaman said that the government's goal is to rationalise the process of taxation for all types of taxpayers including the middle class and the biggest area of focus would be direct taxes. She mentioned that the government’s aim starting from 2019 has been to make the tax process less cumbersome with the new regime of lower rates as an option.

She also stated that the new scheme has no exclusions initially, while the government included standard exclusions to cater the taxpayer's needs in the future. Sitharaman added that in the July budget, this was done again and rates for middle-class people were cut further while the standard deduction was raised.