‘No timeline on withdrawing income tax exemptions’

Union Minister of Finance and Corporate Affairs Nirmala Sitharaman arriving for a media conference in Hyderabad on Sunday.

Union Minister of Finance and Corporate Affairs Nirmala Sitharaman arriving for a media conference in Hyderabad on Sunday.   | Photo Credit: Nagara Gopal

No compulsion to switch to new tax regime, says Union Finance Minister

Union Finance Minister Nirmala Sitharaman has said the objective behind introducing an alternative, second personal income tax regime was to take India towards a simplified, exemption-free and reduced rate of tax regime.

“We want to move forward step-by-step,” she said, adding a timeline, however, has not been set for withdrawing all the exemptions.

“At the moment, we only started a second alternative with some exemptions removed or some exemptions included, although the original intention was to remove all exemptions and give a clear simplified reduced rate of income tax,” she said on the new tax regime that was announced in the Union Budget 2020-21. Under the regime, relatively lower rates will be applicable to those foregoing deductions and exemptions, including those available on home loans, life and medical insurance premium payments.

Speaking to media, after an interactive session on the Budget with trade and industry representatives, tax professionals and academics here, she said introduction of the second alternative was not to compel anyone to give up the exemptions and switch to the new tax regime. If tax payers under the old tax regime wanted to continue, they can do so. For the sake of clarity, a computation has been provided showing how much tax one would pay under both the regime. “It is up to the assessee to decide,” she said.

Medical equipment

Earlier, responding to a leading oncologist who said the 5% health cess on imported medical equipment has come as a rude shock to the medical fraternity and was being introduced at a time when funds for Ayushman Bharat remained unutilised, Ms. Sitharaman said the objective behind introducing the cess was to create medical infrastructure in tier II and III cities. Some of the cities now do not have enough hospitals which can be empanelled for Ayushman Bharat. On the unutilised Aysuhman Bharat funds, she said ₹3,500 crore was lying unutilised and they are for patient care and cannot be diverted for other purposes.

Revenue Secretary Ajay Bhushan Pandey said the health cess is intended to meet the twin objectives of building medical infrastructure in tier-II and III cities and encouraging domestic industry.

A press release from Hyderabad Customs and Central Tax said trade representatives sought clarifications on various issues, including import of machinery for use in poultry industry, classification of locomotive parts, double taxation resulting due to Clean Environment Cess, technology issues relating to revocation of cancellation of registration and Dividend Distribution Tax.

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Printable version | Jul 8, 2020 4:53:17 AM |

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