Tax experts have said that in order to make the alternative tax regime attractive in the coming general budget, deduction should be allowed through PPF and other tax saving schemes.
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Tax experts have said that in order to make the alternative tax regime attractive in the coming general budget, deduction should be allowed through PPF and other tax saving schemes. Along with this, he has demanded to increase the limit of maximum 30 percent tax slab to Rs 20 lakh. The government had introduced an alternative income tax regime in the General Budget 2020-21, in which individuals and Hindu Undivided Families (HUFs) were taxed at lower rates.
What are its features?
However, in this arrangement other tax exemptions like House Rent Allowance (HRA), interest on home loan and investment under 80C are not given. Under this, the total income up to Rs 2.5 lakh is tax free.
After this, 5 per cent on total income from Rs 2.5 lakh to Rs 5 lakh, 10 per cent on total income from Rs 5 lakh to Rs 7.5 lakh, 15 per cent on income from Rs 7.5 lakh to Rs 10 lakh, from Rs 10 lakh Income up to Rs 12.5 lakh is taxed at 20 per cent, income from Rs 12.5 lakh to Rs 15 lakh is taxed at 25 per cent and income above Rs 15 lakh is taxed at 30 per cent. However, this scheme did not attract much attention of the taxpayers, because in many cases, the taxpayer had to pay more tax on adopting it.
What do experts say?
Experts believe that in order to make the alternative tax system attractive, Finance Minister Nirmala Sitharaman should include some popular tax deductions in the upcoming budget besides increasing the limit of tax free income and highest tax rate. Rakesh Nangia, chairman of Nangia Andersen India, said that the government should make tax rates more rational in the alternative tax regime. He also advocated to make it in line with previous deductions or exemptions.
Expressing a similar view, Deloitte India partner Sudhakar Sethuraman said the government may consider allowing some deductions. He said that this should be done without complicating the process. He said that life insurance premium, home loan interest and other deductions can also be given in this scheme.
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