FM Nirmala Sitharaman rules out Reduction in Tax Rates in Old Tax Regime

Finance Minister Nirmala Sitharaman addressed a burning question that most Indian taxpayers want answered: Will the income tax rate for the middle class be reduced? She ruled out lower rates in the old tax regime.

In an exclusive interview with a New Channel, Sitharaman stated, “Since 2019, the goal has been to simply direct taxation. The attempt has been to simplify the procedure, which is why a new regime was implemented and rates remained low. We gave assessees the option of continuing with the old scheme if they wanted exemptions.”

She stated that the new scheme did not include any exemptions, which changed after the government implemented standard deductions. “In the July budget, we had more discussions and reduced rates for the middle class. The standard deduction has also been increased,” Sitharaman stated.

Giving a glimpse into the thinking behind the budget, she stated that Prime Minister Narendra Modi had stated that tax rates should be reduced in order to benefit the middle class.

“We kept the middle class in mind. I understand that some people believe that the lower rates for the new regime should also be applied to the old regime. But our goal with the new scheme was to simplify,” she explained.

She claimed that more than 70% of people had switched to the new regime, while no one was forced to do so. Sitharaman hinted that the majority of people would benefit from the new scheme’s lower tax rates.

She also stated that no direct tax rates had been increased in the Union Budget. Apart from this, the finance minister also spoke on the issue of the goods and services tax (GST).

“The Group of Ministers is trying to simplify and lower rates. The GoM and, later, the council will decide how to proceed,” she stated.