Union Finance Minister Nirmala Sitharaman addressed growing discussions about eliminating the old tax system in India, highlighting that there are no plans to abolish it.

Speaking at the IndiaToday-Business Today Roundtable event on February 4, 2025, she responded directly to concerns about the transition to the new tax framework. Sitharaman noted that while the new tax system aims to simplify the filing process, the old system will continue to remain in place.

The Finance Minister highlighted that the introduction of the new system is designed to enhance ease of compliance for taxpayers, rather than completely phase out the existing structure.

Sitharaman also confirmed that a revised Income Tax Act, set to replace the 1961 law, will be presented in the coming days. This overhaul aims to introduce key reforms, including streamlining procedures, and is expected to be debated and potentially passed in Parliament soon.

Further clarifying the government’s position, Sitharaman addressed the issue of tax rates, especially in relation to the Goods and Services Tax (GST). She revealed that the government is actively evaluating a possible reduction in the number of GST slabs.

At present, there are four GST slabs in operation—5 per cent, 12 per cent, 18 per cent, and 28 per cent. The Finance Minister confirmed that the GST Council has been working on simplifying the tax rates and that decisions on potential changes could be finalized shortly.

Sitharaman reiterated her desire to see both the number of GST slabs and the rates themselves reduced, noting that this process of rationalization is near completion. She also dismissed any political motivations behind recent tax relief measures, particularly those aimed at individual taxpayers.

On the topic of government spending, Sitharaman emphasized that capital expenditure had risen to Rs 11.21 lakh crore, accounting for 4.3 prr cent of India’s GDP. This increase, she noted, reflects the government’s commitment to long-term infrastructure growth and economic development.