Budget 2023: Income Tax Exemption Limit may raise to Rs. 5 Lakh by Govt. in Upcoming Budget

With the Union Budget 2023 less than a month away, a news report claims that the government may raise the income tax exemption limit from Rs 2.5 lakh to Rs 5 lakh. According to sources familiar with the situation, the government is planning to raise the income tax exemption limit from Rs 2.5 lakh to Rs 5 lakh in the upcoming Budget for 2023-24.

According to sources, the move will also increase consumption, which may lead to economic recovery, as well as encourage investment.

Finance Minister Nirmala Sitharaman is expected to present the Union Budget for 2023-24 on February 1. As of now, the maximum amount of income that is not subject to income tax is Rs 2.5 lakh. The exemption limit is Rs 3 lakh for people between the ages of 60 and 80, and Rs 5 lakh for people over the age of 80. If the government actually implements the plan, it will give taxpayers more disposable income.

Income Tax Exemption

On the Other hand, Mohit Nigam, Fund Manager & Head – PMS, Hem Securities said that, “Taxpayers and investors both desire higher tax benefits and lower tax rates. The current income tax exemption threshold of Rs 2.5 lakh may be increased by the government in the upcoming budget.”

In an interview, Mr. Nigam kept on saying, “The budget is expected to significantly increase capital investment because the government is confident that strong tax receipts in 2022-2023 will cover the increased spending.”

What are the expectations from the investors’ community from the finance minister for Upcoming Budget 2023?

Both taxpayers and investors desire greater tax advantages and lower tax rates. In the upcoming budget, the government may increase the amount that is exempt from paying income taxes from the current Rs 2.5 lakh.

If this effort is successful, customers may have more disposable cash and investment may be encouraged. The current tax structure for various assets is a complex web of rates and rules for different asset types.

Corporations want the tax rates to be the same across all industries in order for India to become a hub for both manufacturing and services. However, the tax rates vary depending on the type of business.

This will help the manufacturing and industrial sectors as well as create opportunities for the services sector to grow and perform better than expected.

There was only one tax system up until FY19-20, which had four tax rates and slabs. Taxpayers were able to reduce their gross total income under that tax system by claiming deductions under sections 80C and 80D, as well as tax exemptions on housing allowance and leave travel benefits.

In FY20–21, a new, more accommodating tax structure was implemented. In comparison to the previous, in place tax regime, the new tax regime has lower tax rates. The new tax system has seven tax rates and slabs. The new tax system will require taxpayers to forgo about 70 commonly used tax deductions and exemptions.