If you are a taxpayer or file Income Tax Returns (ITR) annually, this news could bring you some relief.
As in previous years, there is a call to revise the tax slab and increase the limit under Section 80C to benefit the salaried class.
It is anticipated that the government may provide relief to the middle class this time.
According to a report by Moneycontrol, the government is considering raising the tax exemption limit from the current Rs 3 lakh to Rs 5 lakh under the new tax regime in the budget to be presented in July.
Middle Class Relief Expected
Previous media reports suggested that the government might offer income tax relief to specific categories this time.
The news claims that the income tax slab could be revised.
The government believes that by increasing the tax rebate limit, the middle class will benefit, enabling them to spend more.
In the 2020 budget, the government introduced two tax systems, giving taxpayers the option to choose between the old tax regime and the new tax regime.
Old vs. New Tax Regime
In the Old Tax Regime, taxpayers receive rebates on various investments.
In contrast, the New Tax Regime offers lower tax rates but fewer exemptions and deductions.
In the old system, you can claim deductions for investments and exemptions like House Rent Allowance (HRA) and Leave Travel Allowance (LTA).
However, officials have indicated that the government is unlikely to reduce the higher tax slab from 30% to 25% in the new regime.
The focus is on encouraging consumption among low-income individuals.
The government does not plan to alter the tax rates in the old system, despite demands to increase the highest tax rate threshold from Rs 10 lakh to Rs 20 lakh.
The goal is to shift more people to the new tax regime, which has fewer exemptions and deductions but generally lower tax rates.
In the new system, those earning over Rs 15 lakh annually are taxed at 30%, whereas in the old system, this rate applies to those earning over Rs 10 lakh.
