New Delhi: A large number of middle-class people including the salaried and business class are eagerly waiting for income tax proposals to be presented by Finance Minister Nirmala Sitharaman on Tuesday. Income tax slabs and applicable rates have always commanded greater attention of taxpayers than any other aspect in the Finance Minister’s budget speech and any change in personal income tax rate often makes the biggest news headlines.
A large number of middle-class people are looking at the Finance Minister to offer them some relief on account of income tax to be paid by them as the job losses and salary cuts caused by the Covid-induced slowdown in the economy have made lives difficult.
Lowering of tax rates has been a long-standing demand of the taxpayers for the last three years. While Sitharaman announced a major cut in corporate tax rates in September 2019 to shore up a slowing economy, almost no relief has been given to the middle-class tax-payers in the recent past except that they were offered a choice to switch to a new income tax framework in the Union budget of 2020, which was dubbed as a simplified personal tax regime.
However, according to a survey conducted by community networking platform Local Circles, only 13 per cent of over 9,300 respondents have switched to the new income tax regime. On the other hand, a large number of taxpayers, 40 per cent of the total respondents, said they would like to switch to the new income tax structure if the finance minister reduces the tax rate by an additional 2 to 5 per cent.
Read: Union Budget 2022: All you need to know about economic terms of the budget
The survey asked the respondents what would make them switch to the new tax structure as the new regime does not permit deductions but lowers the income tax rates. In response, 37 per cent respondents said they would migrate to the new tax regime if the tax rate is further reduced further by 2 to 5 per cent while 3 per cent respondents were ready to switch to the new regime even at a reduction of 0 to 2 per cent in the tax rate.
However, more than one-fourth of respondents (28 per cent) said that regardless of tax rate they will not migrate to the new tax regime. On the other hand, 13 per cent of respondents confirmed that they had already migrated to the new tax regime and welcomed any further reduction in the tax rate. Nearly one-fifth of respondents did not have an opinion on the issue of migrating to the new tax regime announced by the finance minister in 2020.
