Union Budget 2023: Personal IT regime needs a complete reinvent, said Tarun Bajaj

Ahead of Union Budget for FY24, Revenue Secretary Tarun Bajaj said that the capital gains tax regime needs to be simplified.

"Need to understand that not too many people pay their taxes. On the capital gains tax front, we have various asset classes and indexations are also subjective. Need to simplify the capital gains tax regime. The product should sell based on its strength and not on tax arbitrage. These corrections if made will make things more stable and streamlined," said Bajaj on a possible announcement that could have a bearing on equity markets in the short term.

Bajaj said he wants taxpayers to do both short-term and long-term participation in the stock markets.

"People should invest because the product is good and not let arbitrage be the only point," said Bajaj.

Speaking further on tweaks made to capital gains tax regime, Bajaj said: "I had made a statement post last budget, expecting that I would get few suggestions on what the government should do. There are some small steps that Revenue Department has taken in this regard, like look at the single income tax form."

Bajaj also spoke about the new tax regime for the middle class.

"There are some people who are opting for the new regime. Large number of people in India show income less than Rs 7 lakh per annum, which is close to 80% of the taxpayer base. Large number of people may move to new regime if certain tweaks are made. May be in future, government can have one regime rather than both," the Finance Ministry official said.

Bajaj also agreed that some reforms may be needed on the personal income tax front, a demand made by industry bodies during pre-Budget consultations with FM Nirmala Sitharaman to spur spending and, consequently, boost industries' growth.

"Maybe some reforms are needed on personal income tax also. We need to tinker with some of the provisions that may give relief to few and may not give to others. Need to simplify the process of income tax filing. Don't know what exactly CII (an industry body) means on relief but I agree that we should expand the tax base not increase it," said Bajaj.