With Union Budget 2023 less than a month away, a news report has claimed that the government may enhance the income tax exemption limit to Rs 5 lakh from the existing Rs 2.5 lakh. News agency IANS cited sources privy to developments saying that in the forthcoming Budget for 2023-24, the government is likely to enhance the income tax exemption limit to Rs 5 lakh from the existing Rs 2.5 lakh
The move will also boost consumption, which may also lead to economic recovery. It would also promote investments, sources told IANS.
On February 1, Finance Minister Nirmala Sitharaman is expected to present the Union Budget for 2023-24. The maximum slab of income that is not chargeable to income tax is Rs 2.5 lakh as of now. For people in the age bracket of 60-80 years, the exemption limit is Rs 3 lakh and for senior citizens above 80, the exemption limit is Rs 5 lakh.
If the government actually goes ahead with the move it will leave more disposable income in the hands of taxpayers.
Every year the finance minister announces the income tax slabs for the financial year in the Union Budget. In the financial year 2022-23, the government no changes were announced in the income tax slabs and rates. Thus, a taxpayer will continue to pay the tax at the same rates as the previous financial year.
Till FY19-20, there was only one tax regime with four tax slabs and tax rates. In that tax regime, taxpayers were able to bring down the gross total income, by claiming deductions under sections like 80C, 80D, and tax exemptions on house rent allowance, leave travel concessions were also given.
From FY20-21, a new, concessional tax regime was introduced. The new tax regime has lower tax rates as compared to the old, existing tax regime. The new tax regime has 7 tax slabs and rates. If taxpayers opt for the new tax regime, they’ll have to leave approximately 70 commonly availed tax deductions and exemptions.