Preparation for change in income tax slab, those earning up to five lakhs will not have to pay tax!

At present, there is no income tax on income up to Rs 2.5 lakh per annum. The government is considering increasing this limit to five lakh rupees. That is, if your annual income is up to five lakh rupees, then you will not have to pay income tax. It can be announced in the upcoming budget. This will be the last full budget of the second term of the Modi government. General elections are to be held in the country in the year 2024. That’s why it is believed that in its last full budget, Modi government can give relief to taxpayers. The budget for the financial year 2023-24 will be presented on February 1. Earlier, the last change in personal tax exemption limit was made in 2014. While presenting the first budget of the first term of the Modi government, the then Finance Minister Arun Jaitley had announced to increase it from Rs 2 lakh to Rs 2.5 lakh.

A Business Standard report quoted government sources as saying that the government is considering increasing the personal tax exemption limit in the two-year-old tax regime. It can be increased from Rs 2.5 lakh to Rs 5 lakh. Officials say that this will give relief to taxpayers and they will have more money in their hands for investment. The government had announced the alternative tax regime two years ago. But it didn’t get much value. This is the reason why the government is preparing to change it to make it popular.

old vs new tax structure

In the old tax regime, taxpayers can save tax by using sections 80C and 80D. But many such exemptions have been abolished in the new system. This is the reason why only 10 to 12 taxpayers have adopted the alternative tax regime. There is no tax up to Rs 2.5 lakh in this. 5% from Rs 2.5 lakh to 5 lakh, 10% from Rs 5 to 7.5 lakh, 15% from Rs 7.5 lakh to 10 lakh, 20% from Rs 10 to 12.5 lakh, 25% from Rs 12.5 lakh to 15 lakh and 15 lakh Annual income above Rs.30% is taxed.

Sources say that suggestions have been sought from the concerned departments to improve the new tax system. An official said that the budget discussion on tax would begin next week and the possibility of changes in the new tax regime would be discussed in it. We also have to see what will be its revenue impact and whether it has scope or not. There has been some initial assessment for this and there may be more confusion on this. Changes in personal income tax can be considered in both the new and old systems. The alternative tax regime was announced in the budget for the financial year 2020-21. In this, tax rates were kept low but many types of exemptions were abolished.

Experts say that people getting salary are not benefited in the new tax regime. The reason for this is that they will not get the exemptions available under HRA, LTA, Standard Deduction, Section 80C and Section 80D. However, the new tax regime is beneficial for non-residents. This is because they mostly do not claim the exemption. In the new system, the compliances are less and return filing is very easy. There is no hassle of keeping the documents safe for future reference.

1 thought on “Preparation for change in income tax slab, those earning up to five lakhs will not have to pay tax!”

  1. Seniors/Pensioners and Middle income segment should be given Relief like what is given to Corporates.If exemptions are to be abolished then the Minimum Tax threshold should be Rs10 lakhs. Then no necessary of any exemption. Abolish LTCG To attract investment.

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