Finance Secretary Tuhin K Pandey expects all taxpayers to migrate to the new tax regime by the end of the next fiscal. Pandey, who also holds charge as Revenue Secretary, says there is not much concern about corporate tax collection as the growth is more than the GDP growth.
Edited excerpts:
How many taxpayers are expected to get benefits because of the changes in rates and slabs under the new income tax regime?
Nearly 5 crore people were getting benefits because of rebate up to ₹7 lakh. Now, as the rebate has been enhanced to ₹12 lakh, add one crore more to this number. This means nearly 6 crore filers are not required to pay Income Tax now. With the change in rate and slabs, over 2 crore permanent taxpayers will get benefit. In other words, out of remaining permanent taxpayers, each one will be benefitted as rates transmission will be for everyone. We are not talking about those who are included in the list of taxpayers on account of TDS etc which takes the total number of taxpayers to over ten crore.
Post relief in income tax, what would be the level of enhancement in money circulation in the economy?
I have a different view. The money would be used on account of the relief provided will depend upon individual behaviour, which will vary from individual to individual. One use will be consumption, second could be saving and another use could be investment. Or, there could be combination of any of three. No doubt, personal disposable income will rise and you have all these three choices. If you spend on consumption, that will boost demand for specific industries. If you go for savings and deposits, banks are there to lap it up as they are facing problems in term of deposit mobilisation while they have to disburse credit. Since our focus is continued on capex, there is demand for credit by the private sector. There is also demand for working capital credit and banks would be ready to deploy deposit received as part of IT relief. Now, if you want to invest in housing or buying consumer durables, then industries related with these will be benefitted. Net-net, money will be available for both consumption as well as for saving. One should not forget the importance of household savings. Normally, in India we talk more about investment by government and corporates. But investment by household is also important. In the US, households are indebted heavily while saving is done by corporates. The situation is not the same here and that is important. So in my view, the multiplier here would be combination of consumption and investment.
Nearly three-fourths of tax filers have moved to the new tax regime. At the end of FY26, how many do you think would have moved to the new regime?
May be 100 per cent. Earlier, 30 per cent tax was for the income above ₹15 lakh, now it is proposed that this rate would be applicable for income of ₹24 lakh or more. There is no change in deduction. Until you donate entire earning and take the deduction (100 per cent permissible) under section 80G of the Income Tax Act, you will continue to be under the old tax regime. Under the new tax regime, the calculation is simple and if you have to save tax, then you will have to opt for it. We do not want to further incentivise the old income tax scheme.
Does this mean the old income tax regime will die its own death?
We are simply making the new scheme more attractive.
Basically you are not doing anything for those in the old tax regime...
That is not necessary. What you have to do is to give money to the people. We are not talking about old or new, we are focusing on a simple explanation and that is—you do not have to pay tax if your annual income is ₹12 lakh (₹12.75 lakh in case of salaried person). We are not making things complicated by saying that you will get this much relief under section 80C, 80D or 80CCD. Let’s not get into micro management of individual behaviour.
Corporate tax collection growth is not encouraging. Is this a concern?
Non-corporate assessees include trusts, firms, NGOs and charitable institutions apart from individual. We will have to find a way for a separate challan for individuals and other rates are different. In other words, growth in terms of others should be seen from a business point of view. As of now, there is an aberration in accounting. Coming to corporate tax, we have assumed a buoyancy of 1.03 and in non-corporate tax, it is 1.42. This means corporate tax collection is growing as according to GDP growth rate and we expect earnings to pick up.
Coming to disinvestment, what kind of progress will we see in the ongoing processes as well as new proposals in terms of IPOs?
IPO is a continuous process. There should be a certain size of IPO and there should be certain profitability during three years for the company to be listed. We saw listing of IRDEA and NTPC Green. Let me reiterate, NTPC Green is the beginning, there will be several such green companies which are subsidiaries today of a CPSE and they will be listed.
We prepared a framework to separate the green venture as subsidiary. We said if you want to raise money to create asset, then go to the market. Now, after NTPC, others are also following the same model whether it is NHPC or NLC. Indian Oil and ONGC can also take the same route for some of their subsidiaries. We have seen some progress in case of NLC as they have already set up a company. SJVN can also do the same thing.What about ongoing processes of strategic disinvestment?
