Budget 2023-24: Finance Minister Nirmala Sitharaman had announced the introduction of a new income tax system in the budget presented on February 1, 2020. It is a different matter that due to non-availability of any deduction in the new tax system, the acceptance of the new system could never be made among the taxpayers. But on February 1, 2023, when Nirmala Sitharaman will present the budget, a big announcement is possible regarding major changes in its rules to increase the acceptability of the new income tax regime among taxpayers. It is believed that in the new income tax regime, tax exemption can be given with conditions. So that taxpayers can choose this option.
New tax regime in 2020
While presenting the general budget in the year 2020, the Finance Minister had announced a new table and system of Income Tax Slab. According to this new tax slab system (New Tax Regime), if any taxpayers do not want to take advantage of tax exemption or deduction, they can choose this new tax slab system (New Tax Regime) option. Is. In the new system, no tax has to be paid on income up to Rs 2.5 lakh. Income from Rs 2.50 to Rs 5 lakh is taxed at 5 per cent, in which there is a provision for rebate under 87A. 10 per cent on income between Rs 5 to 7.50 lakh, 15 per cent on income between 7.50 and 10 lakh, 20 per cent on income between 10 and 12.50 lakh, 25 per cent on income between 12.5 and 15 lakh and above Rs 15 lakh. 30% tax has to be paid on the income.
Exemption will be available in the new tax regime!
It is believed that under the new income tax system, the tax exemption limit may be increased from Rs. 2.50 lakh to Rs. 5 lakh and only 5% tax may have to be paid on income from Rs. 5 lakh to Rs. 7.50, which now has to be paid at 10%. In the new tax regime, the benefit of standard dictionary can be given to taxpayers. Obviously, the new tax system can entice taxpayers to make such an announcement.
indifference of taxpayers
In the new income tax regime, those earning up to Rs 2.5 lakh annually do not have to pay any tax, but in the old tax regime, those earning up to Rs 7.5 lakh are saved from paying tax. Most of the people fall in this category and hence there is no incentive to opt for the new income tax regime. Tax rates may be lower in the new system of income tax, but the new system is not appealing to taxpayers due to not getting the benefit of standard deduction apart from tax exemption on home loan principal or interest or savings. In the assessment year 2021-22, less than 5 percent of taxpayers filed income tax returns under the new income tax system.
tax rebate on investment
In the old regime of income tax slabs, taxpayers get the benefit of tax exemption under section 80C on the principal of home loan along with Insurance ELSS, Provident Fund, PPF and children’s tuition fees. There is also a provision of tax exemption on home loan interest up to Rs 2 lakh. Standard Deduction of Rs 50,000 is also available, which is not available in the new income tax system.
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