Push for new income-tax regime: Pain points & what's on offer in Budget

Pain points

> India’s taxation rates had been higher than others like the US or Brazil, though lower than other peers. Those at the highest levels of income were subject to a tax rate of 42.7 per cent compared to 37 per cent in the US and 27.5 per cent in Brazil.

> Income levels remain lower than many peer economies. The average South African income is two-thirds higher than that of an Indian. Brazil is around 90 per cent higher. China has nearly 138 per cent higher average income.

What’s on offer

> The highest rate of taxation has been brought down through reducing the surcharge rate. The surcharge is down from 37 per cent to 25 per cent in the new tax regime. This would bring down the maximum tax rate to 39 per cent.

> There is also a higher threshold proposed for taxation in the new tax regime. This would increase the amount of money people have at the lower end of the tax slabs. The minimum threshold at which taxes will have to be paid has risen from Rs 5 lakh to Rs 7 lakh.