FM Nirmala Sitharaman's Budget goal: Lower rates, simple structure

The FM disagreed with experts who termed the new tax regime complex and unavailing saying it would benefit some taxpayers, if not all.

Finance Minister Nirmala Sitharaman on Sunday said the new tax regime proposed in her second Budget would ultimately lead to lower rates with simple structure.

Dismissing criticism that the new regime would not be largely beneficial to the assessees, she said, “eventually this should lead to a system where people are taxed at the lowest possible rate and are given a simple system. I am starting a scheme, which will eventually end there. For this, I’m not forcing people.” She was speaking to the media in an informal interaction a day after presenting the Union Budget in Parliament.

The FM disagreed with experts who termed the new tax regime complex and unavailing. She said the new scheme would benefit some taxpayers falling in certain brackets, if not all.

“…because the income tax cuts are deeper in the new scheme, we believe a taxpayer from a particular income bracket will be much better off coming into the new system. And in the new system, which however much I repeatedly say has no exemptions, there are some exemptions that we have allowed,” Sitharaman said.

Industry experts, however, argued that two tax regimes with optionality for personal tax, as in case of corporate taxes, only make the structure more complicated. Analysts sent out data to explain how the new tax regime would not be beneficial for those who take exemptions.

But the minister said, “I believe many of the calculations have probably not taken into account the exemptions which have been allowed in the scheme.”

Budget 2020