In the next Union Budget 2023, the federal government is debating on reducing rates under the new income tax system. The government may implement updated slabs as part of the strategy to improve the allure of the optional tax structure.
According to two sources cited in a report by news agency Reuters, the Prime Minister’s Office will make the final decision over the plan.
The fact that it does not permit the roughly 70 basic exemptions that could be claimed under the previous tax system has kept it from becoming more popular, despite the fact that it provides reduced headline taxation for lower income groups.
Allowing exemptions and tax deductions in the new income tax regime would make it complicated, which wasn’t the aim when creating the programme, says one of the government sources cited in the Reuters report.
Currently, citizens can choose between the new income tax system and the old one. Although there is no database to track the number of persons who have chosen the new income tax system, chartered accountants claim that those who earn more than Rs 10 lakh rarely opt for it.
Although the new tax system has simplified tax preparation and reduced paperwork, most consumers do not see it as a tax relief. The government might consider further rationalising the optional tax system in light of this.
Lower tax rates under the new system, a revision of the income tax slabs, and an increase in the basic exemption limit are some of the expectations that taxpayers have ahead of the 2019 budget.
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