Discover the disparities in the treatment of Old Tax Regime (OTR) followers in the Finance Bill 2023, as the Government encourages the New Tax Regime (NTR) with changes in exemptions, rates, and deductions, raising concerns for those sticking to OTR.
In the Finance Bill 2023 passed in the Lokh Saba, the assesses who are following the Old Tax Regime (OTR) are sidelined or in other words discouraged and compelled to follow the New Tax Regime (NTR) for the reasons best known to the Government.
Till the Assessment Year 2022-23 the basic exemption for both OTR and NTR is Rs. 2,50,000 and now this basic exemption has been increased to Rs. 3,00,000 for NTR. The highest rate of 30% starts from Rs. 10,00,000 for OTR and for NTR the highest rate of 30% starts from Rs. 15,00,000 only.
Earlier those who follow the NTR were denied all deductions and this Finance Bill standard deduction of Rs. 50,000/- (Rupees Fifty Thousand only) is given even though they have favorable tax rate when compared to those assesses who follow OTR.
The Surcharge for income above Rs. 5 Crores which was @ 37% is reduced to 25% for NTR only and hence those who follow OTR must pay heft surcharge @ 37% for the income above Rs. 5 Crores.
The limit for claiming rebate under section 87A is increased to Rs. 7,00,000 for those who follow NTR and the limit of Rs. 5,00,000 is retained for those who follow OTR. In addition marginal relief is given for those who follow NTR so that the tax payable by them does not exceed the income that exceeds Rs. 7,00,000/- But such a relief is not given for those who follow OTR, which is not just and equitable. Under OTR for income up to Rs. 5,13,890 the assesses will be paying tax, which will be more than the amount that exceeds Rs. 5,00,000.
The assessees, who are willing to move to NTR, couldn’t do so because they have to share a part of their income, due to commitments made already, in the savings such as LIC premium, repayment of housing loans etc. which were encouraged by the Government earlier for which the assessees have planned long back.
Author Bio
It is nothing but betrayal by the Government because for those who had already planned for long term commitments such as housing loan, life insurance premium etc., since all of a sudden they can not come out of them.