Income taxpayers have high hopes from Budget 2023. Inflation, recession and unemployment are three big problems due to which relief is being expected on the tax front. It is expected from the Finance Minister that on February 1, the tax exemption limit can be increased to 5 lakhs. Let’s know about it in detail.
The preparation of Budget 2023 is in the final stages. There is also a Lok Sabha election in May 2024. Before that this is the last full time budget. Big relief is expected on the income tax front in this budget. There is a big opportunity for the government to make it populist. It is expected that many big announcements regarding income tax can be made in this budget.
Sharekhan has released a report before the budget. In this, what are the expectations regarding personal income tax, it has been mentioned. The report believes that the government’s emphasis in the budget will be on capital expenditure, so that the economy gets a boost. There is little hope for policy reform.
Tax relief expected due to these 3 factors
Sharekhan said in his report that there are three major reasons for the change in income tax. Inflation is still intact and the fear of recession is increasing. The condition of the global economy is worse.
Apart from this, there is an atmosphere of retrenchment all around. In such a situation, the job market is weak. The burden of EMI on employed people is increasing separately. In such a situation, if the government gives relief to the income tax payers, then money will be saved in the hands of the people and consumption will improve. This will give a boost to growth.
What 5 major changes are expected in Income Tax?
- Currently, no tax is levied up to Rs 2.5 lakh. There is a demand to increase this limit to 5 lakhs.
- From 2.5 lakh to 5 lakh, there is a tax of 5%. Under the old tax system, a rebate of Rs 125,000 is available. There is no rebate in the new tax system. There is a demand from the Finance Minister that 5 percent tax should be implemented from 5 lakh to 10 lakh.
- Currently, income up to 5-10 lakhs is taxed at 20 per cent under the old tax system. There is a demand from the Finance Minister that its threshold limit should be increased to 10-20 lakhs and 20% tax should be imposed on this income.
- At present, income above 10 lakh is taxed at 30 per cent under the old tax system. There is a demand from the government that the maximum tax rate should be reduced from 30 percent to 25 percent. At present, net tax on 30 per cent tax is 35.6 per cent including surcharge and cess.
- The fifth demand is that at present the threshold limit for 30 per cent tax is Rs 10 lakh. be increased to 20 lakhs. Meaning, maximum tax rate should be implemented after Rs 20 lakh.