News agency Reuters on Tuesday reported ahead of the Union Budget 2023 due on February 1, the Central government is considering lowering rates under its voluntary income tax framework and could introduce revised slabs. However, the final call rests with the Prime Minister’s Office. The finance ministry did not respond to a Reuters email seeking comment.
A 5 per cent tax is levied on total income between Rs 2.5 lakh and Rs 5 lakh, 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs 10 lakh to Rs 12.5 lakh, 25 per cent on Rs 12.5 lakh to Rs 15 lakh, and 30 per cent on above Rs 15 lakh. Individuals can currently decide which set of rates they want to be taxed under. The government has not made data on the number of individuals availing the new tax system.
Finance Minister Nirmala Sitharaman will present Union Budget for 2023-24 in the Lok Sabha on February 1 amid expectations that the government will raise the income tax limit and provide relief to the middle class taxpayers, besides others. She said while speaking at a function organised by the Panchjanya magazine, an RSS- associated weekly. “I too belong to the middle class so I can understand the pressures of the middle class. I identify myself with the middle class so I know.”
While the new optional income tax scheme offers lower headline taxation rates on annual income, experts say it is unattractive to many as it does not allow exemptions on housing rentals and insurance among other things.
Investments in PPF and other tax savings schemes should be allowed as deductions, and the threshold for 30 per cent tax should be raised to Rs 20 lakh under the concessional income tax regime in Budget 2023-24 to make it attractive for middle-income taxpayers, experts said recently.