Union Government Expected to Introduce New Income Tax Slabs in Budget 2023: Report

- The report added that the basic exemption limit could be increased to Rs 5 lakh

- Some deductions like home loan interest payment etc. are likely to be allowed in the budget

New Delhi, Dated 25 January 2023, Wednesday

The Center is expected to announce a new personal income tax regime without exemption in the next budget. Among the several proposals being examined is to add more slabs so that the income limits in each slab are narrower, a report found.

The Center is having many discussions around it. "Extensive discussions have been held, and the revised plan will have to wait for the budget," a person familiar with the matter told the press. The discussions mostly revolved around two aspects. One, on the new income tax system, which is more acceptable by keeping it simple. Second, the replacement of large numbers of individuals must be revenue-neutral.

"First of all, you have to see that going to the new system should be revenue-neutral or else you might be giving up Rs 20,000-25,000 crore or more in revenue. Also, the slabs should not be such that it would cost people Give a perverse incentive to stay in the lower slab,” said another person familiar with the matter.

Currently, the new personal income tax regime has six slabs, starting at Rs. 2.5-5 lakh income tax bracket, which is taxed at 5 per cent, and increases to 10 per cent, 15 per cent, 20 per cent and 25 per cent with each increase in income of Rs 2.5 lakh. Finally, those earning Rs 15 lakh or more are taxed at 30 percent.

The report added that the basic exemption limit could be increased to Rs 5 lakh and some deductions like home loan interest payments etc. could be allowed in the budget.