Exclusive | Not apprehensive of ‘tax base erosion’: Finance Secretary Tuhin Kanta Pandey

In an exclusive discussion at CNBC-TV18’s Budget 2025 The Verdict in New Delhi on Monday, February 3, Finance Secretary Tuhin Kanta Pandey clarified that the government’s new income tax slabs, which provide relief to individuals earning up to ₹12 lakh annually, are designed to simplify the tax system and encourage compliance.”We are not concerned about the erosion of the tax base,” Pandey said, assuring that rising salaries will naturally push more individuals into higher tax brackets. “As people graduate to higher income levels, the tax base will naturally expand.”The Union Budget 2025 introduced major tax reliefs for salaried individuals, senior citizens, and homeowners. The nil tax slab has been raised from ₹7 lakh to ₹12 lakh under the new tax regime, benefitting middle-class taxpayers.Pandey also highlighted that 75% of taxpayers have already shifted to the new tax regime, and the government expects this number to rise further with the introduction of the new tax slabs.’Political decision and public choice'”It is a political decision and a public choice,” he noted, emphasising that the new structure aligns with the government’s broader objective to provide relief to the middle class.The finance secretary also announced that the new tax regime would lead to ₹1 lakh crore in relief for taxpayers, which would be returned through personal income tax cuts.”Returns will have to be filed for rebates to be processed,” he added, indicating that the system would maintain its efficiency despite the changes.Push for efficiency and transparencyEfforts are being made to streamline the tax process further, with a focus on simplifying tax collection mechanisms. “We have rationed several aspects around TDS (tax deducted at source) and TCS (tax collected at source),” said Pandey, explaining the push for more efficient and transparent systems.The government has proposed increased thresholds for TDS under various sections.In a bid to overhaul the tax code, Pandey revealed that redundant terminologies and complex chapters would be eliminated. “What you call ‘assessment year’ may vanish,” he noted, hinting at an overhaul that would make tax filing more straightforward and accessible for taxpayers.More budget stories on CNBC-TV18 here
(Edited by : Shoma Bhattacharjee)

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