The government wants to boost the economy by putting more money in the hands of the people through the new income tax system. For this, it is being considered to increase the income tax exemption limit to Rs 5 lakh in the upcoming budget.
The government believes that this is a more effective way of providing direct relief to the people instead of schemes. The government is thinking of giving you more money in your hands. It may sound a little strange, but it is true. In the budget coming in July, the government can change the tax rules. Till now, those who earn Rs 3 lakh do not have to pay any tax. However, now the government is considering increasing this limit to Rs 5 lakh.
This means that the government is thinking of increasing the exemption limit. But, this rule will apply only to those who choose the new tax system. In the old tax system, you get many types of exemptions. In the new system, the tax is less and there are no exemptions. The government hopes that this will bring more money in the hands of the people. They will be able to buy more goods. This will strengthen the country’s economy. The final seal will be put on it close to the budget.
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The exemption limit in income tax is the maximum income amount on which you do not have to pay income tax. This limit depends on many factors including your age, residential status and the claim made on your behalf.
Demand to reduce the highest tax rate
A section of the industry has also requested the government to reduce the highest tax rate in the new tax system from 30% to 25%. But the chances of this happening are very low. A government official said that there is little possibility of any change in the tax for those earning more because the need right now is to provide relief to those who earn less.
The government does not want to make any changes in the old tax system either. This is because the government wants more and more people to adopt the new tax system. In the new tax system, those earning more than Rs 15 lakh have to pay the maximum tax of 30%, whereas in the old system this limit is Rs 10 lakh.
What is the government’s intention?
The government wants to give more money to the people by reducing taxes. Instead of increasing expenditure on subsidies and other schemes. This is because many times the full benefit of these schemes does not reach the needy people.
A government official said that boosting the economy by cutting taxes is better than spending money on welfare schemes. This is because sometimes the money is not used properly in the schemes. The full benefit does not reach the people. There has been a decrease in the purchasing power of the people in the country, which is the lowest in the last 20 years.
This is happening at a time when the Indian economy is growing rapidly. In such a situation, the government wants more money in the hands of the people so that they can buy more goods and the economy gets more momentum.
