Union Budget 2020: Tax System Simplified Says Nirmala Sitharaman

The Union Finance Minister Nirmala Sitharaman told the media in a post-budget press conference on Saturday that the underlying intention is to reduce the rates as also to simplify the tax structure. Questioned on the exemptions which will remain in the new tax regime, she remarked that the revenue secretary would come out with a full list as part of the new tax regime.

Minimum exemptions which could not be done away with were retained, the Finance Minister pointed out. The idea she observed, is to ensure that money for spending is in the hands of the people, particularly those from the middle class and lower middle class.

Nirmala Sitharaman pointed out that it was up to the individual to continue with the old regime or opt for the new one. In the case of the corporate tax cut, last September, a similar pattern was adopted.

The Finance Minister observed that the objective is to remove the complications in compliance. Too many exemptions would complicate matters for the individual tax-payer who would have to rely on the expertise of a consultant, she added. The idea is to eventually, remove all exemptions in the future.

The Revenue Secretary told the media that 120 exemptions were reviewed in an attempt to simplify the tax structure. The total number of exemptions scrapped are about 70, he added. Some important ones such as pension and retirement fund, PF contribution, VRS amount, withdrawal/closure from National Pension Scheme (NPS) and encashment of leave, among others, have been retained, he said.

Nirmala Sitharaman asserted that the concept of a Tax Charter is a major step which would ensure that face-to-face interaction with taxpayers need not be there. It will treat them as wealth creators. The idea is to respect the taxpayer, she said.

The Finance Minister pointed out that Canada, USA and Australia are the only three countries which have something similar to a Tax Charter respecting the rights of taxpayers.