‘Two out of three income-tax payers may pick new regime’: CBDT chairman
3 min read . Updated: 03 Feb 2023, 06:32 AM IST
PremiumThe other takeaway is that we sought to address the needs of every sector—start-ups, micro, small and medium enterprises and the cooperative sector.
NEW DELHI : Two-thirds of all personal income tax payers are expected to shift from the old tax regime to the new, which benefits everyone, said Central Board of Direct Taxes (CBDT) chairman Nitin Gupta. In an interview, Gupta also spoke about the crux of legislative changes proposed in the new tax regime, including on TDS requirements on online gaming income. Edited excerpts:
Is it earners up to ₹7-8 lakh and the super rich who will benefit from the proposed slab revision in the new income tax regime?
No, absolutely no. Everyone will benefit. There have been news reports comparing the old personal income tax regime and the new one with the proposed amendments, comparing the benefits between those making full utilization of each and every tax benefit in the old regime—even by those in lower income brackets—with the benefits under the revised new personal income tax scheme. But the point is how many would be able to make use of every tax benefit by investing a large part of their incomes in the lower income brackets? In the revised new income tax regime, there is no need to invest to save tax. The money is with the individual, he is wise enough to decide what to do with his earnings. No one is put to any difficulty. You mentioned those with income above ₹5crore have benefited from the surcharge reduction. Everyone has benefited under the proposed new regime. Those making full use of every tax exemption allowed under the old regime may be outliers.
Any idea on the number of people who might benefit from the new income tax regime?
We think at least two-third of our individual taxpayers will switch. We believe that. Let us see what happens. That will make it a lot easier for tax payers also. They will not have to maintain any documents and also it prevents wrongful claims. That also reduces scope for tax evasion... We trust the tax payer and instances of betraying that trust will become a thing of the past. One thing is very clear. We are moving towards this deduction and exemption free regime. That is the policy of the government and it is on that path we are moving. Also, 15 December was the last date for stakeholder consultation for the common ITR forms. We will now work on that.
The surcharge reduction benefits those with income above ₹5 crore. There has been this perception that some high net worth individuals chose to remain non-residents for tax purposes. Your comments?
These is no basis to these reports, so can’t comment on reasons for people to migrate. Taxes are not low in countries like the US and the UK.
What are the key takeaways of the direct tax legislative proposals in the Finance Bill ?
The most important takeaway everyone is talking about is the revision in the new personal income tax regime. The other takeaway is that we sought to address the needs of every sector—start-ups, micro, small and medium enterprises and the cooperative sector. We have looked into the issue of tax evasion and we have plugged that appropriately. We have taken care of the good suggestions made regarding taxes to be deducted or collected at source (TDS or TCS) and have given some relief in those. We have given a new mechanism for TDS and computation of income in the online gaming sector.
Will the measures to widen tax base not make tax compliance more rigorous?
No. It will make compliance easier in the sense that as of now, whenever ₹10,000 or more has been earned, then they have to deduct tax. Now what we are saying is that the gain or loss may be of small amounts, but TDS is to be made on net basis. (The budget proposed a new TDS provision requiring online gaming operator to deduct tax from the net winnings of the users. There is no threshold proposed for such tax deduction.) There was no clarity earlier and there was a lot of confusion. We are giving certainty and clarity to the entire business community. And with the new section about taxability, how the tax liability has to be worked out is also clarified, but the rate remains at 30%.
The Finance Bill has proposed Permanent Account Number (PAN) as a common identifier for businesses. How will this help?
That is a proposal from the Department of Economic Affairs. Central Board of Indirect Taxes and Customs (CBIC) has also been using PAN. Ultimately, a PAN-based identification can be used for all digital systems of specified government agencies.
