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Nirmala Sitharaman Income Tax Bill - 10 things to know with detail

• The Income Tax Bill introduced by Finance Minister Nirmala Sitharaman aims to simplify the tax structure and reduce the burden on taxpayers.
• One of the key highlights of the bill is the proposal to introduce a new optional tax regime with lower tax rates for individual taxpayers. Taxpayers can choose between the existing tax regime with deductions and exemptions or the new tax regime with reduced tax rates but without deductions and exemptions.
• The new tax regime proposes lower tax rates for different income slabs. For example, taxpayers earning between Rs 5 lakh to Rs 7.5 lakh will now pay 10% tax, between Rs 7.5 lakh to Rs 10 lakh will pay 15% tax, between Rs 10 lakh to Rs 12.5 lakh will pay 20% tax and so on.
• The bill also proposes to increase the threshold for tax deduction at source (TDS) on interest income from Rs 10,000 to Rs 40,000. This will benefit small taxpayers who earn interest income from deposits and savings.
• Another key feature of the bill is the proposal to extend the deadline for making tax-saving investments under Section 80C by three months. Taxpayers will now have until June 30 to make investments in instruments such as PPF, NSC, ELSS, etc., to claim tax deductions.
• The bill also seeks to simplify the process of filing income tax returns by introducing pre-filled ITR forms with details of income, deductions, and taxes paid. This will make it easier for taxpayers to file their returns accurately and quickly.
• The bill proposes to rationalize the provisions related to the taxation of dividends by removing the dividend distribution tax (DDT) and taxing dividends in the hands of the shareholders at their applicable tax rates. This will make the tax treatment of dividends more transparent and equitable.
• The bill also includes provisions to discourage cash transactions and promote digital payments by proposing a higher TDS rate of 2% on cash withdrawals exceeding Rs 1 crore in a year from a bank account.
• The bill aims to promote affordable housing by extending the benefit of additional deduction of Rs 1.5 lakh on interest paid on affordable housing loans by one year. This will provide relief to homebuyers looking to purchase affordable homes.
• Overall, the Income Tax Bill introduced by Nirmala Sitharaman focuses on simplifying the tax structure, reducing the compliance burden on taxpayers, and promoting transparency and efficiency in the tax system.