Finance Minister Nirmala Sitharaman said on Sunday that the idea behind the introduction of second alternative Income Tax slabs without exemptions is to take the country to a “simplified, exemption-free and lower tax rate regime.” However, after an interactive session on the Union budget with trade representatives and intellectuals, she said that the government has not set a timetable for removing all exemptions.
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“At the moment we only started a second alternative with some exemptions removed or some exemptions included, although the original intention was to remove all exemptions and give a clear simplified reduced rate of income tax,” the finance minister said.
Budget 2020-21 has introduced more tax slabs and offers higher limits, if the taxpayer is willing to forego all the current available exemptions and deductions including those against payment of interest on home loans and tax-savings investments.
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“We haven’t made up our minds yet (on removing all exemptions). We are trying step by step, moving forward and no particular timeline given.” she said when asked if there is any timeline for removing all exemptions from income tax.
Speaking at a post-Budget press conference on February 1, Ms Sitharaman said the government intended to remove all exemptions from income tax in the long run.
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On Sunday, she said 69 per cent of taxpayers would have benefited, based on an assumption, and probably 11 per cent would have been “attracted” if the new tax regime had been introduced last year.
On being asked about the Supreme Court order on the payment of duties by telecommunications companies and the concerns expressed by some bankers, Ms Sitharaman said it may not be appropriate for her to comment on the matter as there is a concerned ministry looking into it.
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On a question regarding complaints by the Telangana government that there has been a reduction in the transfer of funds from the Center to states, she said the allocation is followed up according to the recommendations of the Finance commissions and it is not true that the Center does not cooperate with states.
