All industries, businessmen, taxpayers, experts etc. are sending their box of expectations from the budget (Budget 2023) to Finance Minister Nirmala Sitharaman through different mediums.
At the same time, tax experts have said that in order to make the Optional Tax Regime attractive in the upcoming general budget, deduction should be allowed through PPF and other tax saving schemes. Along with this, he has demanded to increase the limit of maximum 30 percent tax slab to Rs 20 lakh.
The government had introduced Optional Income Tax Regime in the General Budget 2020-21 in which individuals and Hindu Undivided Families (HUF) were taxed with lower rates. However, other tax exemptions like rent allowance, home loan interest and investment under 80C are not given in this arrangement.
Total income up to Rs 2.5 lakh tax free
Under this, total income up to Rs 2.5 lakh is tax free. After this, 5 per cent on total income from Rs 2.5 lakh to Rs 5 lakh, 10 per cent on total income from Rs 5 lakh to Rs 7.5 lakh, 15 per cent on income from Rs 7.5 lakh to Rs 10 lakh, from Rs 10 lakh Income up to Rs 12.5 lakh is taxed at 20 per cent, income from Rs 12.5 lakh to Rs 15 lakh is taxed at 25 per cent and income above Rs 15 lakh is taxed at 30 per cent.
Taxpayers had to pay more tax in many cases
However, this scheme did not attract much attention of taxpayers, because in many cases taxpayers had to pay more tax on adopting it. Experts believe that in order to make the optional tax regime attractive, Finance Minister Nirmala Sitharaman should include some popular tax deductions in the upcoming budget, apart from increasing the limit of tax-free income and the highest tax rate.
Demand to make tax rates more rational
Rakesh Nangia, chairman of Nangia Andersen India, said that the government should make tax rates more rational in the optional tax regime. He advocated to make it in line with the previous deductions or exemptions.
Expressing a similar view, Deloitte India partner Sudhakar Sethuraman said the government may consider allowing some deductions. He said that this should be done without complicating the process. He said that life insurance premium, home loan interest and other deductions can also be given in this scheme.
