As the economy has been resilient after the pandemic and returning to a growth trajectory, tax experts are expecting some changes in Income Tax slab rates in Union Budget 2023, especially for those in the higher tax slabs.
Deloitte is expecting tax relief for individuals in higher tax slabs. “Per the current income tax provisions, an individual is required to pay taxes based on slab rates. The highest slab rate (after including surcharge and cess) for income exceeding INR 5 crore in India is at present 42.744 per cent,” said Tapati Ghose, Partner, Deloitte in her Budget expectations.
Ghose further said that slab rates have not changed since FY 2017-18. Hence, some tax relief for taxpayers who are in the highest tax rate of 30% should be provided to increase their purchasing powers.
“The tax rate for individuals has not been changed since FY2017-18 (new tax regime bought in FY2020-21). Hence, to give more purchasing power to individuals and some relief to the employed taxpayers, the highest tax rate of 30 percent should be reduced to 25 percent and the threshold limit for the highest tax rate be increased from INR 10 lakh to INR 20 lakh. Therefore, the proposed highest slab rate (including surcharge and cess) can be reduced to 35.62 percent,” Ghose said.
According to Deloitte, the revision of tax slab rates in Budget 2023 should be as follows:
- For income above Rs 20 lakh, the tax rate should be reduced from the current 30% to 25%.
- For income in the Rs 10-20 lakh bracket, the tax rate should be reduced from the current 30% to 20%.
- In the new tax regime, the slab rate for income in the range of Rs 10-Rs 20 lakh bracket should be reduced from the current 30% to 20%.
- For income above Rs 20 lakh, the tax rate under the new regime should be reduced from the current 30% to 25%.
Budget 2023 is expected to be presented by Finance Minister Nirmala Sitharaman on February 1, 2023.