New Delhi: Most of the salaried individuals with gross income of ₹13 lakh or more and non-salaried persons with income of ₹9.5 lakh or more will get to make tax savings if they sign up for the new lower income tax rate scheme announced in union budget for FY21, a Finance Ministry official said on Sunday.
The ministry has made an impact analysis of the proposed low personal income tax rate regime in the case of salaried people who avail themselves of tax deductions of ₹2 lakh and non-salaried individuals of ₹1.5 lakh, who account for about 92% of the 5.79 crore income tax return filers in the country.
The analysis reviewed by Mint shows that the scheme will offer a tax saving of ₹5,200 to a salaried individual earning ₹13 lakh, while a person with ₹14 lakh salary will make a saving of ₹10,400 and anyone with a salaried income of ₹15 lakh and above will save ₹15,600.
In the case of non-salaried individuals with ₹9.5 lakh income, savings from the new scheme will be 5,200. Those with income between ₹10.5-14.5 lakh, the savings will range from ₹7,800 to ₹28,600. Those earning ₹15.5 lakh or more in this class, the savings will be RS 31,200, as per the analysis.
This analysis of the potential benefits of the low tax scheme is relevant for people who have, under the current income tax regime, claimed deductions less than ₹2 lakh. They account for 5.3 crore tax return filers. The official, who spoke on condition of anonymity, said that only 3.77 lakh taxpayers have claimed deductions above ₹4 lakh. For this reason, analyzing the impact of the scheme by assuming the deductions in the range of ₹4-5 lakh for some individual taxpayers would be hypothetical and would not present the correct picture, said the official.
“There are a large number of people, who, for various reasons, are not able to spare money from their income to invest in the various saving instruments such as provident fund, pension schemes, interest on house loans, insurance etc. and therefore are unable to take full advantage of all deductions. Therefore they end up paying more tax in the old regime vis a vis the new one," said the official, adding that in the proposed low tax regime, such people will be gainers.
Also some of the MSMEs, pensioners and youth who have joined jobs recently may prefer to go for new tax regime as it would be more beneficial for them, said the official.
