Big news! Income tax slab will be change this year check tax slab standard deduction slab

Income Tax 2023: `I know your love is 100% for me but 30 percent of it goes to income tax even before it reaches me.` They sit in a secluded corner of the restaurant eating their respective portions of snacks and drinking coffee Sitting is part of the conversation of loving couples.

Last year, when the middle class did not get any relief in income tax after the budget was presented, this part of the conversation was put on social media by a middle class Diljale by making a meme. Not one but many such memes were made and when they started trending on social media, a news website made a whole story on them.

Last year, the people of the salaried class had high hopes from the budget that there would be one big announcement or the other and this relief would act as a trumpet on the dent Corona has made in their pocket. The budget is not just an account of the year’s deposits and expenditure in front of the people on behalf of the government, it is also a mirror of the expectations of the people. And, if the surveys just before the budget last year are to be believed, there was a sizeable number of people hoping for relief in income tax.

Last year’s budget defied expectations

According to Grant Thornton Bharat, an assurance, tax and advisory firm, just before the budget for the year 2022, there was confidence among the people about the growth of the economy. 81% of the participants in the survey expected that the third wave of the Corona epidemic would not bring any major upheaval in the economy. And the economy will grow. A total of 57% of such participants said that there must be major reforms in the budget on the personal income tax front. In comparison, the number of respondents expecting reforms in GST and Customs was 25%.

A total of 69% of the respondents in the survey had expressed the expectation that the amount of tax free has been kept from the total income of a person. Its limit will go beyond Rs 2.5 lakh. The highest number of respondents (90 per cent) in the survey said that the government should either increase the deduction limit under section 80C or it should at least increase the maximum amount of income tax free under standard deduction. Give

But relief was not to be given and it was not given. What would the poor middle class man do, he adopted the same method which he has been adopting till now, with his desperation, he destroyed the social media from his feet to his head. It was said in most of the memes that ‘the budget has disappointed the salaried-pensioners and senior citizens, the middle class has always been ignored and it was feared that this will happen but there is hope for the next year’.

The interesting thing with hope is that despite being rebuffed again and again, it persists and it is like a sweet pain in its persistence, it neither leaves nor adopts. So, in these times full of expectations just before the budget, the important question is whether there will be any big or small relief in the matter of income tax in the coming budget?

That year was another, this year is another

The salaried class sitting in hope saw with great sadness that the mood of giving relief in income tax is not visible from anywhere – neither there has been any change in the ongoing tax-slabs nor the standard deduction. ) the limit of relief given under has been increased. Realizing the remorse of the middle class, the mainstream media asked the Finance Minister why you didn’t think of giving income tax exemption for the salaried people even in your fourth consecutive budget?

You would still remember the answer given by the Finance Minister. As if slapping a fresh injury, the Finance Minister’s reply was that be thankful, we did not increase any other tax separately for revenue collection and let the tax-slab remain as it was, otherwise the situation would have worsened due to the Corona epidemic. Some had become so challenging that the idea of ​​increasing the income tax could be thought of. And, also be thankful that due to Corona, the exchequer has been in a state of disrepair for two consecutive years, but there was no increase in income tax neither last year nor this year.

This argument of the Finance Minister was not digested even last year, yet this argument could have been given on behalf of the government because the time of economic distress is the time for the king and the people to spend by pulling hands and clenching their fists. But this is the year 2023, there are reports of corona outbreak but experts are saying that the economic condition of the country seems to have improved a lot as compared to earlier.

There has been an increase of 23 percent in the net direct tax collection for the financial year 2022-23 so far and the economy has shown growth in the first three quarters of the year 2022 as compared to the year 2021. This is a strong indication that the economy has not only recovered from the injury of the pandemic but is now moving ahead with renewed vigour. The budget will definitely showcase the hope that the boom in the economy will be maintained further.

After the passing of the last month of the year 2022, we can now hope that the growth in the Gross Domestic Product (GDP) will continue at a moderate pace, if not very fast, whereas it was difficult to expect such a thing in the beginning of the year. Thus, what to say about the uncertainties of the global economy, even if we estimate the growth rate of the economy in the new year, it can be between 5.5 percent to 6.1 percent (advice on audit, assurance, risk management, tax etc.) Deloitte, a global financial institution, has estimated this in its document named Budget Expectations published in December of 2022). The government is repeatedly saying that the fundamentals of the economy are in a very sound condition.

Relief Expectations: What to expect on the personal income tax front

35-40 percent of direct tax comes from individual taxpayers. Obviously, then on the personal income tax front, a large number of people have pinned hopes that the tax relief which has not been done for the last four years, should at least be in this year’s budget.

According to the new report Budget Expectations (published in December 2022) by Deloitte, an organization of financial advisory, according to the current income tax provisions, individual taxpayers will have to pay tax according to different slab-rates prescribed. The highest slab-rate (inclusive of surcharge and cess) is 42.74 per cent for annual income above Rs 5 crore.

Personal income tax rates have not changed since FY 2017-18 (the new tax regime in which tax-rebate under section 87A is no longer applicable came in FY 2020-21). According to the new report of Deloitte, in view of the high inflation, there is a need to strengthen the hands of salaried taxpayers in terms of purchasing power and hence it would be appropriate to bring down the maximum tax rate of 30 per cent in the tax-slab to 25 per cent.

Similarly, it would be rational to increase the threshold limit of maximum tax rate from Rs.10 lakh per annum to Rs.20 lakh per annum. By doing so, the government can bring down the highest slab-rate of maximum tax (including surcharge and cess) to 35.62 per cent, giving relief to personal income tax-payers. Remember that places that are often touted for economic growth, such as Hong Kong (17 per cent) and Singapore (22 per cent), have peak income tax rates of less than 30 per cent.

There is also another front of relief. If the Finance Minister wishes, he can increase the limit of deduction available on taxable income under various sections of Income Tax in the new budget. At present, under section 80C, a maximum amount of Rs 1,50,000 is exempted from tax on account of insurance premium, investment made towards provident fund and purchase of certain equity shares. Inflation has made it difficult in recent years to maintain consumption levels at a respectable level. If the government increases the limit of exemption given under section 80C, then it will have a double benefit. Firstly, the salaried class will be able to put more part of their income in savings and the purchasing power of their hands will also increase.

The same thing can be said about section 80D and 80TTA of the Income Tax Act. For example, currently, a maximum deduction of Rs 25,000 can be claimed as health insurance premium under 80D (maximum Rs 50,000 in case of a senior citizen). As medical expenses have increased in recent years, it would be pertinent to increase the deduction limit under this section to give relief to the taxable income.

Under Section 80TTA, interest up to Rs 10,000 earned by an individual or a Hindu Undivided Family on deposits in banks, post offices and co-operative societies is tax-free. Since people prefer to keep in fixed deposits etc. to earn more interest on the amount of savings, therefore giving relief to them, the maximum limit of taxable interest can be increased under this section also.

In short, increasing the amount of savings in the banks and strengthening the purchasing power of the consumer will be good for the health of the economy and with this belief the government can give relief to the salaried class mainly on two fronts in terms of income tax. One is to reduce the maximum slab-rate of taxes and the other is to increase the maximum limit of relief that can be given in taxable income under various sections of the Income Tax Act.

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