Wednesday, February 1, 2023

 Points to note in the proposal of Income Tax for F.Y 2023-24:

* In Old Regime of Tax, No changes made in any of the following provisions like

 Basic exemption limit.i.e Rs.2,50,000,

Slabs, Rate of tax, deduction under various sections like 80C

 Rebate, Senior citizen benefit etc.,

*All the changes announced are in New Regime only.

Also New Regime is made as default type.

Hence Old Regime tax system is made to loose its attraction in due course.

* Though the rates are attractive in New Regime, Savings habit of employees might diminish.

All the money after paying Income Tax, will be at the disposal of employee.

Intention to save by way of , Buying Residential property, taking Insurance policy (including various instruments under 80C)  making additional contribution to NPS,

Taking Health Insurance policy,

 etc., may decrease in due course.

* Still Basic exemption limit is only Rs.3,00,000 and not Rs.5,00,000 as promised by the present rulers in 2014.


Personal Income Tax as proposed for Financial year 2023-24 in the Budget tabled on 01.02.2023:

145. Now, I come to what everyone is waiting for -- personal income tax. I have five major announcements to make in this regard. These primarily benefit our hard-working middle class. 

146. The first one concerns rebate. Currently, those with income up to  Rs.5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to  Rs.7 lakh in the new tax regime. 

Thus, persons in the new tax regime, with income up to Rs. 7 lakh will not have to pay any tax.  

147. The second proposal relates to middle-class individuals.  I had introduced, in the year 2020, the new personal income tax regime with six income slabs starting from Rs.2.5 lakh. I propose to change the tax    structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs.3 lakh. 

The new tax rates are:

 *Rs.0-3 lakh Nil 

*Rs.3-6 lakh 5 per cent 

*Rs.6-9 lakh 10 per cent 

*Rs.9-12 lakh 15 per cent 

*Rs.12-15 lakh 20 per cent 

Above Rs.15 lakh 30 per cent  

148. This will provide major relief to all tax payers in the new regime. An individual with an annual income of 

Rs.9 lakh will be required to pay only  Rs.45,000/-. 

This is only 5 per cent of his or her income. 

It is a reduction of 25 per cent on what he or she is required to pay now, ie.Rs.60,000/-. 

Similarly, an individual with an income of Rs.15 lakh would be required to pay only  Rs1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of Rs.1,87,500/.  

149. My third proposal is for the salaried class and the pensioners including family pensioners, for whom I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of 

Rs. 15.5 lakh or more will thus stand to benefit by Rs.52,500. 

150. My fourth announcement in personal income tax is regarding the highest tax rate which in our country is 42.74 per cent. This is among the highest in the world. I propose to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. This would result in reduction of the maximum tax rate to 39 per cent. 

151. Lastly, the limit of Rs.3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was Rs.30,000/- pm. In line with the increase in government salaries, I am proposing to increase this limit to Rs.25 lakh. 

152. We are also making the new income tax regime as the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime. 

No comments: