Revenue Secretary Sanjay Malhotra on Friday asserted that the new personal income tax regime, which relies on taxpayers not availing any exemptions, will not affect the country’s savings rate as the basis of such tax exemptions Household savings are “actually a very small proportion of total savings”.
Acknowledging that many had expressed concern about the impact on savings due to the Budget’s push for a new tax-free regime, Mr Malhotra said the country’s total household savings is about ₹25 lakh. Of the crore, only ₹4 lakh crore has been placed through Rs. These tax saving instruments.
While India’s savings rate is around 27% to 30% of GDP, the revenue secretary said that people will not stop investing even if they switch to the new tax regime, and the market will look for new ways to attract financial savings from those people. Will also bring options. Those who move away from the tax exemption-driven regime.
“The new small savings scheme announced in the budget for women and expansion of scope (investment limit) in two other small savings schemes (Senior Citizen and Monthly Income Scheme) will help the country improve our savings rate,” he said.
“On the other hand, the market will re-calibrate and find the right level to make it more attractive for people to save so that the country has enough money to invest…and people are investing now even otherwise. I Did a survey to ask people about it and they said they will continue to save and will not stop just because the tax exemption has been withdrawn,” Mr Malhotra said.
He was replying to a question by Confederation of Indian Industry (CII) Director General Chandrajit Banerjee whether the new tax regime would encourage savings.
Asserting that the revenue projections in the Budget 2023-24 are realistic and not conservative, Mr. Malhotra indicated that a higher jump in GST and direct tax collections, which have increased by nearly 24% this year, is expected every year. cannot be done.
“The higher growth rate we are seeing this year is partly due to two reasons – apart from simplification and tax avoidance measures. There is also a base effect as the first quarter of last year was the Covid-hit period. Second, There was a marginal increase in GST rates in July.
Similarly, direct taxes also saw a sharp increase as the dates for filing income tax returns were earlier than the normal dates as opposed to the postponed dates in the past few years, he explained.