Finance minister Nirmala Sitharaman on Wednesday said the Union Budget 2023 seeks to make it more attractive for individuals to move to the new tax regime and is aimed at benefiting the middle class.
India goes to the general elections next year.
“Personal income tax has seen substantial changes after a very long time, which will benefit the middle class. This country has been waiting for direct taxation to be simplified and compliance to be made easier,” Sitharaman told reporters after presenting her fifth straight Budget.

“The new taxation regime we brought in two-three years ago has now got greater incentives and attraction so that people can unhesitatingly move from the old system to the new. Of course, we are not compelling anyone to move to the new regime and those who want to remain in the old system can do so. The new one is now attractive as it gives greater rebate, is simplified and has lower rates of taxation and lesser number of slabs,” she added.
A reason for incentives in the new regime could be low traction among taxpayers. While revenue secretary Sanjay Malhotra refused to share the number of taxpayers who had opted for the new regime in the last two years, he said 61% companies had opted for the no-exemption plan. He said the government sees a majority of individuals moving to the new regime.
“We want to make the new tax regime, which is without exemptions, attractive enough for individuals through better rates and easier compliance. If rates are so low, you are going to pay less even without any exemptions. The ultimate interest is to make the simpler regime more attractive,” Sitharaman said.
Asked about the decision to lower the surcharge for those in the highest income bracket (under the new regime), Malhotra described the move as an interim one.
Explaining the rationale for higher tax collected at source requirements for overseas remittances for investment and foreign tour packages, the revenue secretary said the idea was to keep the rates closer to income tax rates.
Finance secretary TV Somanathan said the government had come across several instances where individuals have bought property in Manhattan or invested overseas but the tax returns do not indicate their true income. He said the idea was to plug leakage.
The Budget, Sitharaman said, was “beautifully balanced” as she sought to strike a balance between growth and fiscal consolidation, while ensuring the interests of the poor and the middle class were taken care of. She said the government was moving ahead with the fiscal consolidation plan and added that the government has been proactive about containing inflation.
Republished. Link to Original Article: https://timesofindia.indiatimes.com/business/budget/fm-sitharaman-applies-amrit-anjan-balm-to-give-middle-class-relief/articleshow/97537727.cms