New Delhi: Modi government’s last Union Budget before the 2024 Lok Sabha Elections could come as a major relief for taxpayers and salaried individuals. After announcing no change in the tax slabs in the last few Budgets, the government could announce revisions in the income tax slabs.
Announcements concerning the new Income Tax Regime, announced by Finance Minister Nirmala Sitharaman in 2021, could be made to make it more attractive. While the tax amount is less in the new Income Tax Regime, it doesn’t offer any exemption benefits which is why the regime hasn’t found many takers.
In view of this, the government is working to make the new tax regime more attractive and ET Now has learnt that the Ministry of Finance is planning to change the income tax slabs under the regime. Sources have indicated that the ministry could hike the taxable income exemption from the existing limit of Rs 2.5 lakh to Rs 3.5 lakh or Rs 4 lakh.
Current tax slabs under new Income Tax regime
|TAXABLE INCOME||TAX RATE|
|Rs 2.5 lakh to Rs 5 lakh||5%|
|Rs 5 lakh to Rs 7.5 lakh||5%|
|Rs 7.5 lakh to Rs 10 lakh||15%|
|Rs 10 lakh to Rs 12.5 lakh||20%|
|Rs 12.5 lakh to Rs 15 lakh||25%|
|Rs 15 lakh and above||30%|
Changes in New Income Tax Regime Structure
It is being recommended that to keep 20 per cent tax limit for individuals having taxable income of up to Rs 20 lakh under the new tax regime. This move could invite more takers to the scheme, that has, so far, invited abysmal response. The recommendations were made by several industry bodies during pre-budget consultations.
Another rationale behind this is that if tax slabs are reduced after removing the exemptions and if taxpayers adopt the new regime with exemptions, the documentation process would also be simplified.
Under the old income tax regime, taxable income of up to Rs 7.5 lakh is tax free when exemptions are also taken into account. This makes the old structure more lucrative than the new one. Due to these reasons, some revisions in the new structure are being planned by the government.
Worth mentioning here is that there has been no change in the income tax slabs since 2017-18, barring the announcement of the new tax regime in 2021.
Union Budget 2023
Meanwhile, Finance Minister Nirmala Sitharaman is all set to announce Union Budget 2023 on February 1, which would be the last full budget of the present government at the Centre and expectations are high that the government will offer tax incentives to the salaried class, and offer sectoral reliefs to real estate, insurance, tourism and other sectors in a bumper giveaway.