Earlier, in September 2019, a new tax system was introduced for corporate taxpayers. In this, along with reducing the tax rate, the exemption available was abolished. Sources say that the government is planning to prepare such a tax system, in which there is no concession. Along with this, the government is preparing to end the old tax system with exemptions and deductions.
New tax system introduced in 2020-21
A new tax system was introduced by the Finance Ministry in the Union Budget 2020-21. After this, the employed and businessman had two income tax systems, out of which he could choose any one for the financial year. In the new tax system, the taxpayer could choose the old system with different deductions or the new system of lower rates without exemptions and deductions.
People liking the new tax system
Sources in the Finance Ministry say that those who have paid off their home loan and education loan are more preferring the new tax system. Apart from this, there are people who are preferring the old tax system implemented with various deductions and concessions even today, because in this you do not have to pay any tax on income up to Rs 9 lakh annually.
To simplify the tax system
Sources also say that the purpose of introducing the new tax system in the year 2020-21 was to make the income tax system easier for the taxpayers. At the same time, they had to be given the freedom to select investment options as per their convenience.
In the new tax regime introduced on February 1, 2020, for personal taxpayers, no tax has to be paid on annual income up to 2.5 lakhs. There is a tax of 5 percent on the income of 2.5 lakh to 5 lakh rupees. Similarly, there is a tax of 10 percent on income of five lakh to 7.5 lakh and 15 percent on income from Rs 7.5 lakh to 10 lakh. There is a tax of 20 percent on the income of Rs 10 lakh to 12.5 lakh and 25 percent on the annual income of Rs 12.5 to 15 lakh. Similarly, 30 percent tax is levied on income above 15 lakhs.