CHENNAI : Salaried taxpayers have said the new income tax slabs and a hike in the standard deduction announced in the Union Budget have fallen short of expectations.
KP Ranga Prasad, an IT Professional from Srirangam, said taxpayers who opt for the old tax regime have not received any benefit. This indirectly encouraged taxpayers to migrate to the new tax regime.
"As old regime taxpayers, we expected some benefits, such as increasing the standard deductions to at least Rs 1 lakh from Rs 50,000, which was not done. There were several exemptions for taxpayers in the old regime when they invest in social security schemes unlike the new regime. This indirectly pushes taxpayers towards migrating to the new regime which is slowly altering our spending culture," Ranga Prasad said.
Supriya P, who has opted for the old tax regime and works in IT sector in Chennai, said, "For me, there is no change in the tax slab itself, which will be 30%. However, my husband and I were hoping that the deductions under (Section) 80C would be increased to at least Rs 2 lakh to Rs 3 lakh from the gross taxable income but it continues to remain at Rs 1.5 lakh."
RP Sreedhar, an accounts and finance consultant based in Chennai, said while it was expected that the standard deductions would be increased as was done in the last five years, it could have been increased to at least one lakh, considering the increased cost of living.
"Further, while several salaried employees have opted for investments that go on up to 10 years to 15 years, they provide no tax benefits to them at present as capital gains tax has been hiked," Sreedhar said. Short term capital gains tax will be increased from 15% to 20% and long term capital gains will be taxed at 12.5%.
S Vijaykumar, an employee of a private company in Madurai said he would not have to pay any tax with the increase in the standard deduction from Rs 50,000 to Rs 75,000 in the new tax regime.
"My salary is more than Rs 7 lakh. After applying the standard deduction, it will come to around Rs 6.9 lakh, and I will fall under the new tax slab of Rs 3 lakh to Rs 7 lakh. Applying the tax rebate under 87A, I need not pay the 5 % tax also. However, if I chose to go with the old tax regime, I would have to pay more tax despite applying my tax saving options like health and term insurance," he said.
“The new tax regime offers a mixed bag of benefits and disadvantages for salaried individuals. On one hand, the changes promise immediate tax relief by way of beneficial tax rates upto 10,000 and another 7500 due to increase in standard deduction, while on the other, they may deter long-term savings and market investments as long and short capital gains rates are increased by 2% and 5% resulting in net zero benefit for salaried class like us,” said Ram Prakash(35) who works at a private firm.