Union Government expected to introduce new income tax slabs in Budget 2023: Report
It is expected that the Center may announce a new personal income tax regime without any exemptions in the next budget. A report found that among the many proposals being examined is to add more slabs so that each slab has lower income limits.
Many types of discussions are happening in the center regarding this. A person familiar with the matter told the press, “There have been extensive discussions and the revised plan will have to wait for the budget.” The discussions mostly revolved around two aspects. One, on the new income tax system, which is more acceptable by keeping it simple. Second, the replacement of a large number of persons should be revenue-neutral.
“First of all, you have to see that moving to the new system should be revenue-neutral otherwise you may give up Rs 20,000-25,000 crore or more in revenue. Also, the slab should not be such that it becomes costly to the people. Give perverse incentives to remain in the lower slab,” said another person familiar with the matter.
Currently, there are six slabs in the new personal income tax regime, starting from Rs. 2.5-5 lakh income tax bracket, which is taxed at 5 per cent, and rises to 10 per cent, 15 per cent, 20 per cent and 25 per cent with each increase in income of Rs 2.5 lakh. Finally, those earning Rs 15 lakh or more are taxed at 30 per cent.
The report said that the basic exemption limit may be increased to Rs 5 lakh and certain deductions like home loan interest payment etc may be allowed in the budget.