‘Tax option will help 69% individual filers’

NEW DELHI: At least two-thirds of people who pay taxes will be able to save money if they move to the new income tax scheme, a top government official has said, citing an analysis of filings in 2018-19 that showed only a small proportion of assessees as having fully utilised the exemption options that brought down their tax liability.

The new scheme gives taxpayers a significantly lower rate than the old one, but does away with 70 of 120 “deductions”. The scheme, Union finance minister Nirmala Sitharaman said while announcing the budget on February 1, was meant to leave people with more money in their hands instead of forcing them to saving it.

“I’m reasonably confident that about 80% of the taxpayers would find NTR (new tax regime) beneficial and I have data analytics to support this estimation… We have analysed tax data base of financial year 2018-19 with almost all kinds of deductions and exemptions availed by the taxpayers and found that around 69% of the taxpayers would be able to save up to ₹78,000 by switching to the new regime,” revenue secretary Ajay Bhushan Pandey said.

According to the analysis, he added, only 0.6% of the 57.8 million taxpayers whose filings were analysed claimed deductions and exemptions in excess of ₹4 lakh, and the proportion claiming above ₹2 lakh was 8.4%.

In the proposed new regime, an individual will be required to pay tax at a reduced rate of 10% for income between ₹5 lakh and ₹7.5 lakh, against the current rate of 20%.