Union Budget 2023 expectations: The Income Tax exemption limit is currently Rs 2.5 lakh for the assessees. This means individuals earning up to Rs 2.5 lakh/year do not have to pay any taxes. Though taxable income up to Rs 5 lakh is also practically tax-free due to the rebate provided by Section 87A, income above Rs 5 lakh increases the tax liability of the individual taxpayer. Therefore, there is a demand for raising the income tax exemption limit from Rs 2.5 lakh to Rs 5 lakh.
Associated Chambers of Commerce and Industry of India (ASSOCHAM) has proposed that the Government should increase the income tax exemption limit to Rs 5 lakh in Budget 2023 so that individuals will have more disposable income in their hands.
The government should increase the exemption limit for income tax to at least Rs 5 lakh so that more disposable income is left in the hands of consumers and the economy gets a consumption boost and further leg-up in the recovery. Without accounting for rebates, the present exemption limit is Rs 2.5 lakh for the assessees, ASSOCHAM said in its pre-Budget recommendations.
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Is it possible to raise the Income Tax Exemption limit?
During an interaction with the media on December 15, ASSOCHAM President Sumant Sinha said that buoyancy in both the direct and indirect taxes should give enough elbow room to the government for raising the income tax exemption limit.
”Boosting consumption by leaving more money in the hands of the consumers, is a low-hanging fruit for a further recovery in economic growth, ” said Deepak Sood, Secretary General ASSOCHAM.
While suggesting another relief measure, ASSOCHAM said the interest for late payment of the GST should be reduced to 12 per cent from 18 per cent. ”The penal interest rate of 18 per cent is too high, particularly for the MSMEs,’ it said.
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According to ASSOCHAM, India’s macro situation looks far more positive than most of the major economies. But we need to remain focused on growth. “The next year’s budget would be a catalyst for enabling India to be the fastest growing economy of the world. Our focus should be both boosting consumption and investment,” it said.