In this, measures like changing the tax slab and increasing the scope of exemption can be taken. When Finance Minister Nirmala Sitharaman will present the country’s budget next week on February 1, most of the eyes will be on the job profession. Taxpayers have been waiting for a new exemption for a long time and there is scope for changes in the income tax slab as well. Experts believe that this time some big announcements can be made regarding taxpayers.

Most of the conversation is taking place regarding the slabs included in the old regime of income tax. At present, up to 2.5 lakhs, a direct tax exemption is available, while income from 2.5 to 5 lakhs is taxed at the rate of 5%. However, it is returned to the taxpayers. That is, earning up to 5 lakhs becomes completely tax free.

But, as soon as your income goes above 5 lakhs, the tax rate on it directly increases four times to 20 percent. Experts estimate that the maximum number of employed people also fall in this slab. If changes are made here, a large number of people will get relief.

What can happen, the rate

expert estimates that this time the government can add a new slab to the old tax regime along with the change in the new regime. This change will be for taxpayers with income ranging from Rs 5 lakh to Rs 7.5 lakh. It is estimated that the tax rate on this income can be reduced to 10 or 15 percent, which is currently 20 percent. It happens that lakhs of salaried taxpayers will get a big help in saving tax.

Relief even on earning more than 10 lakhs!

Income tax experts say that this time the benefit of tax exemption can be availed not only in the 20 per cent bracket, but also those earning more than 10 lakhs. Currently, income above 10 lakh is directly taxed at 30 per cent. It is being speculated that in this bracket, the slab of 30 per cent can be reduced to 25 per cent. Only a few days are left for the budget to come and this time the most awaited is regarding income tax.

Will the tax exemption limit also increase?

Experts also estimate that this time, along with changing the tax slab, the government can also increase the exemption limit on all types of investments. This includes investment schemes like NPS, PPF and ELSS. Tax exemption on PPF and increasing the investment limit to Rs 3 lakh are being speculated, which is currently only Rs 1.5 lakh annually.

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Farmers and employed people have the highest expectations from this budget. At present, the limit of exemption from income tax is Rs 2.5 lakh. That is, a person earning up to two and a half lakh rupees annually does not have to pay any kind of tax. Like the last budget, the demand for increasing it is being made on behalf of crores of employed people this time also.

Income up to Rs 5 lakh is tax free!

However, tax rebate is available on taxable income ranging from Rs 2.5 lakh to Rs 5 lakh due to the exemption given under Section 87A. As per the rules, there is a provision to pay income tax on income above Rs 2.5 lakh. But the amount of tax made on income from Rs 2.5 to Rs 5 lakh is exempted under section 87A by the Ministry of Finance. In this way income up to 5 lakhs becomes tax free. But if your income is more than 5 lakhs, then you have to pay tax on the entire income above 2.5 lakhs.

Proposal to increase the income tax exemption limit to five lakhs

This is the reason why, like earlier, there is a demand to increase the income tax exemption limit from Rs.2.5 lakh to Rs.5 lakh. On behalf of the Associate Chambers of Commerce and Industry of India (ASSOCHAM), a proposal has been given to the government to increase the income tax exemption limit from Rs 2.5 lakh to Rs 5 lakh. If this demand is accepted by the Finance Minister, then more money will come in your hands than before.

The announcement will be made on February 1, 2023.

In the recommendation sent to the Finance Ministry, Assocham has said that the limit of income tax exemption should be increased to at least Rs 5 lakh. This will save more money to spend in the hands of the common man. This will increase the buying capacity of the common man and the market will accelerate. If any kind of decision on income tax is taken by the Finance Ministry, then the Finance Minister will announce it only during the presentation of the budget on February 1, 2023.

Is it possible to increase income tax exemption

Assocham President Sumant Sinha had said during a conversation with the media in the past that a boom in both direct and indirect taxes would help in increasing the income tax exemption limit. Assocham Secretary General Deepak Sood said that leaving more money in the hands of customers will encourage consumption.

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