Budget 2023: 'Two in three taxpayers may shift to new tax regime,' says CBDT chief

With government giving relief to the taxpayers by increasing the limit of the income tax slab rates in new as well as old tax regime, Central Board of Direct Taxes (CBDT) Chairman Nitin Gupta has speculated that at least 50-66% (two-thirds) of the total taxpayers will switch over to the new tax regime in the next financial year itself. 

Talking to the news agency ANI, Gupta said, "We have left it to the taxpayers as to how many people will shift to the new tax regime. We have left it up to the taxpayers which tax regime they want to live in, but we think that at least 50% to 65-66% (two-thirds) taxpayers are likely to switch over to the new tax regime in the first year itself." 

Income tax rebate limit hiked and slabs reduced

Citing the budget announcement, the CBDT Chairman said that the income tax rebate limit available for salaried and individual taxpayers under the new income tax regime, introduced in 2020, has been hiked to Rs 7 lakh from Rs 5 lakh. Also, the government has limited the tax slabs to five from six slabs in the new income tax regime. 

"On personal income tax, the government announced that tax for income of upto Rs 3 lakh is nil, for income above Rs 3 lakh and up to Rs 5 lakh will be taxed at 5%, for income of above Rs 6 lakh and up to Rs 9 lakh will be taxed at 10%, for income above Rs 12 lakh and up to Rs 15 lakh to be taxed at 20% and above 15 lakh at 30%," said Nitin Gupta adding that not only for salaried individuals, tax slabs have been widened by reducing the tax slabs from 6 to 5. 

#WATCH | Persons earning between Rs 5-7 lakhs will get benefits if they shift to new tax regime. It's up to the taxpayer to choose the tax regime-new or old. We think that at least 50% to 66% are likely to switch over to the new tax regime in the first year itself: CBDT Chairman pic.twitter.com/kaWHZFcvpJ

— ANI (@ANI)

Explaining the new tax system to the agency, he further added, "I assure that this scheme will be beneficial for anyone whose income is up to Rs 7 lakh. The person who is in the salaried class and earns more than 7 lakh, we have given him the benefit of standard deduction of Rs 50,000. This means that if someone's total income is 7.5 lakhs, then after getting the deduction of 50,000, his income will remain 7 lakh and he will not have to pay any tax."