Govt may add I-T slabs in tax regime overhaul

Income range covered in each slab may be made narrower in new scheme

- Gireesh Chandra Prasad

The government has held extensive discussions over the past few weeks to overhaul the new personal income tax regime without exemptions, with a new plan expected to be announced in the Union budget on 1 February, a person aware of the development said.

One of the proposals examined is to add more slabs to the new income tax scheme so that the income range covered in each slab is narrower, preventing taxpayers with diverse incomes from clustering in wide slabs, said a second person, who also spoke on condition of anonymity.

"Extensive discussions have been held, and you have to wait for the budget for the revised scheme," the first person said.

The discussions in the finance ministry were around two key aspects. One is about making the new personal income tax regime more acceptable while keeping it simple, and second, whether the shift to the new income tax regime by a large number of individuals should be a revenue-neutral affair for the exchequer and to what extent, if at all, the government can forgo revenue so that the Centre's overall fiscal maths does not get upset.