On February 1, 2023, Nirmala Sitharaman will present the full-year Budget 2023. There is a great deal of anticipation among citizens regarding the announcements in the Budget regarding income tax slabs. Individual tax rates haven’t changed since FY2017-18. Only the ‘New Tax Regime’ was introduced in February 2020. To give individuals more purchasing power and to provide some relief to employed taxpayers, experts are calling for changes to the slab rates in Budget 2023.
The Income Tax Act currently sets four slabs for determining income tax deductions. The tax slabs differ according to a number of factors, including age, income, residency status, and so forth.
Taxpayer’s expectations from Budget 2023
Delloite India believes the central government can change the tax slabs of the old income tax regime to increase the threshold limit for marginal tax income from $10 lakh to $20 lakh. Furthermore, the government is advised to reduce the tax rate to 25 percent from 30 percent.
It seems that the current Section 80C investment limit of 1, 50,000 are too low. As a result of the increase in costs of living and inflation, the government should consider raising the limit. There will be two benefits, namely, individuals will be more willing to save and they will also benefit from a lower tax bill, increasing disposable income as commodity prices rise,” Tapati Ghose, Partner, Deloitte India said.
Deductions and exemptions
Even though consumer inflation has increased by 50% since 2014, the 80C limit of Rs 1.5 lakhs remains unchanged. As part of the new regime, the government can also evaluate enabling this benefit. People will have more disposable income as a result of a rise in tax savings, which will fuel the country’s economic growth. Taxpayers can also invest in long-term savings through 80C to fund infrastructure projects in the long run, such as the National Pension System (NPS), Public Provident Fund (PPF), etc.
For enterprises and companies
The income tax rate in India differs based on the sector. A uniform corporate tax rate of 15% is being advocated by companies in order to position India as a hub for manufacturing and services. By doing so, manufacturing would be bolstered and the services sector would prosper.
Nonetheless, individuals and companies can benefit from concessionary tax regimes. LLPs and partnership firms, on the other hand, are still subject to a flat 30% tax rate. Governments could introduce similar concessions for them.
New Tax Regime
A new tax regime was implemented at the beginning of the current financial year, which taxpayers have the option of opting for. However, they are not eligible for any deductions or exemptions. Individuals will be taxed differently under the new tax regime based on factors such as age, gender, income, etc. The decision to opt for one of the tax regimes depends on the taxpayers at the current time.
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