With few takers for the exemption-free personal income tax regime, Union Budget 2023-24 is likely to review the tax structure and could announce a few sweeteners as well, as the government tries to incentivise more people to opt for it.
Under the additional personal income tax regime announced in Union Budget 2020-21, individual taxpayers who forgo most deductions and exemptions can pay taxes at comparatively lower rates. However, with no exemption for long-term investments, social security and medical insurance, the option hasn’t got any traction among taxpayers, including those in low-income brackets.
According to sources, the government is likely to continue with both personal income tax regimes: the older one, which offers tax exemptions and deductions with relatively higher tax slabs, and the “concessional” regime.
It is, however, looking at allowing certain exemptions such as those related to house rent, housing loan interest, social security and medical insurance even for the newer regime. The slabs could also be rejigged to ensure that the tax liability on most taxpayers will reduce, and more meaningfully for those in the lower tax brackets.
While the finance ministry is understood to be examining the issue, a final decision is expected in the next one week or so. The Union Budget will be presented in Parliament on February 1.
Source from: https://www.financialexpress.com/budget/budget-2023-new-i-t-regime-may-add-some-exemptions-2949117/