Business
The government's initiative in Budget 2020 aimed to streamline the tax structure and ease complexities, introducing the optional New Personal Tax Regime.
About 70 deductions and exemptions were eliminated from the Income Tax Act, with a focus on reviewing and rationalizing the remaining provisions under the New Personal Tax Regime.
The New Personal Tax Regime offered reduced tax rates spread across six income levels, contrasting with the previous four-level structure.
The initial response to the New Personal Tax Regime was mixed, as it excluded tax benefits associated with common deductions and exemptions, raising concerns among taxpayers.
The introduction of the new regime created ambiguity for taxpayers in choosing between the old and new regimes, prompting a careful evaluation based on individual circumstances.
The New Personal Tax Regime retained benefits like employer contributions to the National Pension System (NPS) and specific allowances under section 10(14).
The government introduced an online tax comparative calculator, allowing individuals to assess their situations and determine the most beneficial tax regime.