Ajit Karn
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Income tax basic exemption limit: The biggest news so far is coming out for the taxpayers who pay income tax. Till now the tax free limit (Income tax Basic Exemption limit) for salaried people is Rs 2.5 lakh. But, now it can be increased. The finance minister can announce this in the budget 2023. the Ministry of Finance, this time many gifts are going to come for taxpayers in the budget. The biggest gift in this is regarding the tax free limit. Means now taxpayers will have to pay less tax on their salary or say that more part of the salary will be tax free.
Income tax basic exemption limit may increase in the budget
In simple words, if a part of your salary up to Rs 2.5 lakh is tax free. No tax has to be paid on this. Those earning less than Rs 2.5 lakh are also exempted from filing income tax return. The country’s budget is to come on 1 February. In this budget, the tax free limit (Income tax basic exemption limit) can be increased. If sources are to be believed, the income tax free limit can be increased from Rs 2.5 lakh to Rs 3 lakh. In the existing rules, till now for the general public (taxpayers), there is no tax on income up to 2.5 lakhs. Whereas, for senior citizens, this limit is Rs 3 lakh. Talking about super senior citizen (80 years), then this limit is 5 lakh rupees.
This is the second term of the Modi government. The first term started in the year 2014. During that time, soon after coming to power, the government had given very good news to the taxpayers. The government had increased the income tax free limit (income tax basic exemption limit) from Rs 2 lakh to Rs 2.5 lakh. But, since then there was no change in the income tax slab in the last 9 years. But, this year 2023 is the last full budget of the second term of the Modi government. In such a situation, everyone from economist to financial expert is assuming that the tax free limit will increase. The limit can be increased from 2.5 lakh to 3 lakh.
There can be a big change in Income Tax slab as well
If sources in the Finance Ministry are to be believed, there is going to be a change in the income tax slab this year as well. In the current income tax slab, income up to Rs 2.5 lakh is not taxed (Income tax basic exemption limit). Income between Rs 2.5 lakh to Rs 5 lakh is taxed at 5%. There is a direct tax of 20% on income between 5 to 10 lakh rupees. But, this year there can be a 10% tax cut for this slab. Means income up to 10 lakhs can be brought in the slab of 10%. Such a step can be taken to rationalize the tax slab. Income up to Rs 10-15 lakh can also be taxed at 15%.
In the budget of the year 2017-18, the then Finance Minister late Arun Jaitley had reduced the tax burden on the income group from Rs 2.5 lakh to Rs 5 lakh. He reduced the tax on this slab from 10% to 5%. Under Section 87A of the Income Tax Act, 1961, the rebate was reduced from Rs 5,000 to Rs 2,500 for those earning between Rs 2.5 lakh and Rs 3.5 lakh. In such a situation, this time the expectation of increasing the income tax basic exemption limit is very high.
current income tax slab
Income up to 2.5 lakhs: Tax free
Annual income up to 2.5-5 lakhs: 5% tax
Annual income up to 5-10 lakhs: 20% tax
Annual income above 10 lakhs: 30% tax
As #UnionBudget 2023-24 is round the corner, let us glance through the major announcements made in past years’ Union Budgets and how the Government endeavours to fulfil those announcements.
👉 Watch this space for more updates.#PromisesDelivered pic.twitter.com/FQ5dk89UtL
— Ministry of Finance (@FinMinIndia) January 2, 2023
