Finance Minister Nirmala Sitharaman said on Friday that the voluntary income tax scheme with seven tax brackets was introduced by the government to secure lower rates for low-income people. Sitharaman said that under the old tax system, each tax assessment could claim around 7-10 exemptions and the income tax rates vary between 10%, 20% and 30%, depending on the income threshold.

The minister said that in addition to the old tax system, the government has developed a parallel system that has no exemptions, but with simpler and more favorable tax rates.