The Centre is anticipated to introduce a new system of personal income taxation without exclusions in the forthcoming budget. According to a report by a leading media house, adding more slabs to make the income range in each slab narrower is one of the numerous suggestions being looked at.
It has been the subject of numerous rounds of debates at the Center. The publication was informed by a source with knowledge of the situation that “extensive conversations have been held” and “you must wait for the Budget for the updated program.”
Two main topics were the focus of the discussions. One is on a new, simpler income tax system that is more palatable. Second, the widespread change ought to be financially neutral.
There are currently six income tax brackets under the new personal income tax system. The lowest income bracket is the Rs 2.5–5 lakh range, which is taxed at 5%; the higher income ranges are taxed at 10%, 15%, 20%, and 25% with each additional Rs 2.5 lakh of income. Finally, people who make Rs 15 lakh or more must pay a 30 per cent tax.
The basic exemption cap could be increased to Rs 5 lakh, and the Budget may permit specific deductions, such as those for home loan interest.