The Salaried Indians are waiting for the Budget 2023 with much hope for economic relief. Although there was no tax-related announcement in the previous budget, expectations are high for, among other things, rebates and an easing of tax slabs, the standard deduction, and the Section 80C limit. This budget allows for an increase in the tax-free threshold with a basic exemption threshold for income tax. According to recent economic debates and notable news publications, the income tax-free threshold could be raised from Rs 2.5 lakh to Rs 3 lakh.
The most important news has come to light for taxpayers who pay income tax. The income tax bare exemption ceiling for salaried individuals is currently Rs 2.5 lakh. However, it can now be raised. According to the exclusive information obtained by Zee Business, the Ministry of Finance would include many benefits for taxpayers. Regarding the tax-free threshold, this is the most significant gift as this brings less tax on salaries for taxpayers, or more of the wage will be tax-free. The tax slab can be rationalised by taking this action. 15% of income up to Rs 10-15 lakh is also taxable.
Expectations in the Budget 2023
When Nirmala Sitharaman, the country’s finance minister, delivers the Union Budget 2023 on February 1, the salaried class in India is hoping for some relief. However, the income tax slab has remained unchanged for the past 9 years. Everyone, from economists to financial experts, assumes that the tax-free threshold will rise in such circumstances. A significant shift in the income tax slab is also possible.
Income up to Rs 2.5 lakh is exempt from taxation under the current income tax bracket and the Income-tax basic exemption limit. Taxes range from Rs 2.5 lakh to Rs 5 lakh and are levied at 5%. On income between 5 and 10 lakh rupees, there is a direct tax of 20%. However, there may be a 10% tax reduction for this slab this year. Meaning that income up to Rs. 10 lakhs can be included in the 10% slab.
Economy Analysis and the Possible Tax Changes
The Finance Ministry conducted a review to identify strategies to increase the adoption of the new exemption-free income tax regime in preparation for the forthcoming Union Budget 2023–24. Out of the 75.2 million taxpayers who filed income tax returns for the current assessment year, less than 500,000 chose the new system. With a maximum rate of 30% applied to revenues over Rs 15 lakh, the new income tax system offers a spectrum of lower tax rates.
The conventional system’s tax rates, including exemptions, are 5%, 20%, and 30%, with the highest rate on incomes over Rs 10 lakh. To increase the acceptance of the new income tax system, officials are now examining it. And reduce the overall tax burden. It has been suggested that the income threshold for taxation be raised from Rs 2.5 lakh or the tax bands be changed. According to a report in Economic Times, another choice is to permit a set number of deductions, such as those for housing costs or health insurance.