For this, amendments have been made in the Finance Bill. In the amendment, it has been provided that persons earning income slightly more than the tax free income of Rs 7 lakh will have to pay tax only on the additional income.

The Lok Sabha has approved the Finance Bill 2023. In this, some relief has been given to taxpayers under the new tax regime through amendment. The new tax regime will come into effect from 1 April.

These taxpayers will get relief

Explaining the provision, the Finance Ministry said that under the new tax regime, if a taxpayer has an annual income of Rs 7 lakh, then he would not have to pay any tax. But if the income is Rs 7,00,100, then tax of Rs 25,010 has to be paid on it. Due to this additional income of Rs 100, taxpayers have to pay tax of Rs 25,010.

That is why it has been proposed to give a minor relief so that the tax paid by the person should not exceed the increased income from tax free income of Rs 7 lakh. In this case, the income in excess of Rs 7 lakh is Rs 100, so tax should also be levied on the same amount.

Sandeep Jhunjhunwala, partner at Nangia Andersen LLP, said the amendment in the Finance Bill has been made to provide some relief to individual taxpayers whose income is marginally higher than the tax free income.

Income tax free up to Rs 7 lakh

In the budget for the financial year 2023-24, it was announced that taxpayers adopting the new tax regime, whose annual income is up to Rs 7 lakh, will not have to pay tax. Experts believe that this step was taken to motivate the taxpayers of the salaried category to adopt the new tax regime.

No exemption on investment in new tax regime

No exemption is given on investment in the new tax regime. Now the government has made up its mind to give some more relief to these taxpayers through amendment in the Finance Bill. However, the government has not mentioned how much taxpayers with income above Rs 7 lakh will be eligible for this relief. Tax experts have told according to the calculation that individual taxpayers whose income will be up to Rs 7,27,777 can get the benefit of this provision.

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The biggest demand is that the taxable income limit should be increased from 2.5 lakhs to 5 lakhs (taxable income limit). According to media report, the government can give good news on this. Sources told that the government can make changes in the New Tax Regime to make the new tax system attractive. After the presentation of the budget, income up to Rs 5 lakh may become tax free.

Income up to 5 lakh can be exempted (Tax Exemption Limit)

It is reported quoting sources that the government’s focus is on making the new tax system attractive. Under this, it is being considered to give tax exemption on income up to 5 lakhs. At present, no tax has to be paid on income up to Rs 2.5 lakh. At the same time, there is a provision of 5% tax on income between 2.5 lakh to 5 lakh. At the same time, there is no tax on income of 5 lakhs in the old tax system. In such a situation, the government is considering making these changes to make the new tax system more popular.

It is known that the inclusion of exemption on home loan interest in the new tax system is under consideration. Along with this, preparations are being made to include standard deduction exemption in the new tax system. In the new tax system, 30% tax can also be reduced. Even in the old tax system, the tax rate of 5-15 lakhs can be reduced.

The government had optionally introduced a new tax regime in the 2020 budget, in which six new slabs were introduced – 5%, 10%, 15%, 20%, 25%, and 30%. There are three slabs of 5%, 20% and 30% in the old slab, with which all the benefits of tax deduction are available, which are not available in the new tax regime.

At the same time, in the new regime, there is no tax on annual income of 2.5 lakhs. Income up to 2.5-5 lakhs is taxed at 5%. 10% tax on annual income of 5-7.5 lakhs, 15% on income between 7.5 lakhs and 10 lakhs, 20% tax on income between 10 and 12 lakhs, 25% between 12.5 lakhs and 15 lakhs and 15 lakhs Income above 30% is taxed annually.

Government can take big decisions in the last full budget

Modi government is going to present its last full budget this year in Modi 2.0 tenure. In such a situation, it is being speculated that the government can bring a populist budget this time. Lok Sabha elections are going to be held next year, in such a situation only the interim budget has to come next year, so the government can take big decisions only this year. Tax exemption can be a big announcement, so it is expected that this time there can be relief in tax.

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