Optional tax regime aims to provide relief to low-income bracket people: FM

Finance Minister Nirmala Sitharaman on Friday said the optional income tax regime with seven tax slabs was brought in by the government to ensure lower rates for those in the low income bracket.

Sitharaman said in the old tax regime, every tax assesses can claim about 7-10 exemptions and the income tax rates vary between 10, 20, and 30 per cent, depending on income threshold.

The minister said along with the old tax regime, the government has come up with a parallel system which has no exemptions, but with simpler and more favourable tax rates.

"The reason why I had to bring in seven slabs was to make simpler and lower rates for those who are in the lower income (bracket)," Sitharaman said.

She was speaking at an event to launch the book 'Reform Nation', authored by Observer Research Foundation Vice President Gautam Chikarmane.

The government in Budget 2020-21 introduced the optional income tax regime, under which individuals and Hindu Undivided Families (HUFs) were to be taxed at