Last Update: February 04, 2023, 11:32 IST
Revenue Secretary Sanjay Malhotra (Photo: Twitter handle of Ministry of Finance)
Revenue secretary Sanjay Malhotra says total household savings today is 27-30 per cent of India’s GDP and the schemes announced in the budget will help the country improve the savings rate
Revenue Secretary Sanjay Malhotra on Friday said that household savings through tax saving instruments is just Rs 4 lakh crore, which is 16 per cent of the total savings and the country’s savings rate will not be threatened by moving to the new tax regime. He said that total household savings today is 27-30 per cent of India’s GDP and the schemes announced in the budget, especially for senior citizens and women, will help the country in improving the savings rate.
“I would also like to point out that the savings through tax exemptions are actually a very small part of the total savings of our country, which is around Rs 25 lakh crore for households. The savings through tax (savings) instruments are only Rs 4 lakh crore. You know people are investing now.”
To encourage taxpayers to move to the non-exemption tax regime, Budget 2023-24 has proposed a transition to the new alternate tax regime, which provides that no tax will be levied on annual income up to Rs 7 lakh .
It also allowed taxpayers to claim standard deduction of Rs 50,000 – seen as a push for the salaried class to switch to the new tax regime where no exemption is provided on investments.
Under the old regime, people with income up to Rs 5 lakh paid no income tax. Moreover, various deductions and exemptions can be claimed on savings and expenditure, making it attractive for people to stick to the old system.
There were concerns that if people migrated to the new tax regime without exemptions, savings through insurance and other tax saving instruments would reduce. Malhotra also said that the government is considering rationalizing the provision of Tax Deducted at Source (TDS).
“TDS is something that we need to look into. Whatever scope there is to simplify it, reduce the number of TDS rates or eliminate them, we will certainly look into that.”
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)