The Central government is reportedly considering lowering rates under its voluntary income tax framework and could introduce revised slabs in the upcoming Budget 2023.
A 5 percent tax is levied on total income between Rs 2.5 lakh and Rs 5 lakh, 10 percent on Rs 5 lakh to Rs 7.5 lakh, 15 percent on Rs 7.5 lakh to Rs 10 lakh, 20 percent on Rs 10 lakh to Rs 12.5 lakh, 25 percent on Rs 12.5 lakh to Rs 15 lakh, and 30 percent on above Rs 15 lakh. Individuals can currently decide which set of rates they want to be taxed under.
Finance Minister Nirmala Sitharaman will present the Union Budget for 2023-24 in the Lok Sabha on February 1 with expectations that the government will raise the income tax limit and provide relief to the middle-class taxpayers, besides others.
While the new optional income tax scheme offers lower headline taxation rates on annual income, it is said to be unattractive to many as it does not allow exemptions on housing rentals and insurance among other things.
Experts say that investments in PPF and other tax savings schemes should be allowed as deductions, and the threshold for 30 percent 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.
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