• Notification Date: 25-01-2023
• Notification No: N/A

Centre likely to Introduce New Income Tax Slabs in Budget 2023

According to reports, the Centre is expected to announce a new personal income-tax regime without exemptions in the upcoming Budget. Other proposals are also being examined, which are likely to add more slabs so that the income range in each slab is narrower. 

The Centre has been conducting several rounds of discussions around it. "Extensive discussions have been held, and you have to wait for the Budget for the revised scheme," a person aware of the matter stated. 

The discussions revolved mostly around two aspects. The first aspect being on a new income-tax regime which is more acceptable while keeping it simple. Second aspect is the shift by a large number of individuals should be revenue-neutral. As per the report, "first, you have to see whether moving to the new system should be revenue-neutral or you can give up, say, Rs 20,000-25,000 crore or so in revenue. Also, the slabs should not be such that it gives a perverse incentive for people to remain in a lower slab."  

At present, there are six slabs in the new personal income tax regime, starting with the Rs 2.5-5 lakh income bracket taxed at 5 percent. The rate increases to 10 percent, 15 percent, 20 percent and to 25 percent with every Rs 2.5 lakh of increment in the income. Finally, a 30 percent tax is levied on those earning Rs 15 lakh and above. 

The report added that the basic exemption limit could be raised to Rs 5 lakh and the Budget could allow certain deductions like interest payment on home loans etc.