The new tax rules have raised several questions. Could you explain how it benefits taxpayers?

So the number of exemptions was a hurdle in simplifying the tax system?

There is a large segment of population in the 30-40 age group, earning around Rs 20 lakh to Rs 40 lakh... this person who has HRA, LTC etc would be worse off...

Could the slabs be increased in a way that a person is not worse? At present, the slab is not attractive enough.

Can more measures to reduce rates be expected?

There is a criticism that there are too many tax slabs.

What about incomes beyond Rs 15 lakh a year?

The expectation is that a no-exemption norm will be adopted totally.

Somehow, efforts to get people who have taxable incomes into the tax net have not met with much success...

There is a view that the state is not giving any support in areas like education or health if all exemptions are given up.

There is a question why long-term capital gain was not touched.

What is the experience with corporation tax cuts?

And the DDT ...

What is the rationale behind increasing the number of days for NRI status?

NEW DELHI: The new tax regime offers an option other than itemised deductions and is in line with tax systems around the world. It may not benefit everyone but allows many unable to claim all exemptions to switch to a better system, revenue secretary Ajay Bhushan Pandey tells Sidhartha , Surojit Gupta and Rajeev Deshpande . Excerpts:Companies give you consolidated salaries, asking you to choose how your salary should be distributed. A lot of people in this segment are likely to gain. Then, a businessman with a turnover of around Rs 2 crore does not have HRA or LTC or various other exemptions. On a turnover of Rs 2 crore, his taxable income is Rs 16 lakh (at a rate of 8%, which will be subject to income tax). He can’t claim all exemptions. In contrast, there might be someone who claims Rs 4.5 lakh exemptions. But there are not many people like that. Many may take only a Rs 1.5 lakh exemption. Many in the 55-60 age bracket, who own a house and do not pay a loan any more, do not get HRA and may not want to contribute to NPS. They will be gainers in the new system. The idea is that in this exemption-riddled regime there were lot of people without requisite savings to save tax, they were at a disadvantage.Read also: 'If Kuber wants to give, then you must keep doors open'The primary purpose of this exercise is to move to a simplified tax regime. And to provide some relief to people who, because of their financial situation, are not able to access all kinds of exemptions.That is correct. Such a person will stay in the old regime.There can be a situation where you make it attractive but you need to see how much revenue the government can forego. This exercise alone is going to cost Rs 40,000 crore. Ideally, we should bring down the tax rate to a level that everyone is benefited. Given fiscal constraints, this is not possible.It depends on the response and how much tax we should be collecting. What should be our tax to GDP ratio? There is also a view that exemptions should not exceed a certain ratio to income. In the old regime, it is inequitous for those who cannot take the exemptions.The number of tax slabs is a progressive model. If you have lesser or gradual tax, you do not feel the pinch. Earlier, there was 5%, 20% and 30%. Most countries in the world, China, Thailand , Malaysia , Philippines , US, Australia, have six-seven slabs. When people are moving from one tax slab to another, they should not get a shock. If the jumps are steep, there would be a tendency to under report income.Beyond Rs 15 lakh, the rates are the same but they benefit too. They pay tax on lower rate on income which is less than Rs 15 lakh.There are systems elsewhere where you take a flat deduction or take itemised deductions. There are alternatives in most countries. The situation here was we were only itemising deductions but there was no flat rate option. In a country of 130 crore people, there are only around 1.5 crore people who are actually paying taxes. Out of that, one has find how many will find it beneficial to switch to the new regime. People may have a choice from the two options which are available. A person may have some constraints that prevent him from taking exemptions. We feel this is a significant section. Could we have reduced rates even more? We have to keep the fiscal space in mind.We know this, data is being collected on property purchases, someone making gains in equity market, an expensive lifestyle, a mismatch between income declared and GST.No, state support is there for so many services. In fact, many receive services without paying any tax at all.The fundamental principle of taxation from the fairness, equity point of view, is that every element of income be taxed. If a salary is being taxed, as is business income, then why should capital gain, another form of income, not be taxed. If someone has sold a property, it is an income and should be taxed. If someone has got gains from stock market, it is also an income. The risk in stock market is no different than that in an MSME. It was introduced in 2018, and people say don’t keep changing rules. It leads to distorting the tax structure, suppose stocks are offered as part of income? Remember, investments in stocks and MFs happen on basis of solid assessments of the economy and policy environment. Our policy for a country of 130 crore cannot have a tax structure like a tax haven.It seems more than 90% will opt for the lower tax.Please see, the taxation earlier was almost 25%. The rate on debt funds was around 30%. Even someone with income less than 5 lakh would be taxed at 20-25%. Someone with higher incomes was also paying at the same rate. Then, people at lower incomes were virtually subsidising the rich. The demand of industry was to go to the classical tax system, and that is what has been done. A majority of people with lesser incomes will pay a lower dividend tax. Foreign investors will gain, dividend will be taxed in the hands of recipients and they will get credit at home.It is not a question of number of individuals, it is a matter of principle. This is an anti-abuse provision. It will not affect a person who is working in the Gulf, for example.