Finance Minister Nirmala Sitharaman is set to present her fourth union budget on February 1, 2022. Some analysts feel that the finance minister may announce major relief to taxpayers.
The expected relief include an increase in the basic exemption limit from Rs 2.5 lakh to Rs 3 lakh and for senior citizens, it is likely to be increased to Rs 3.5 lakh from the present Rs 3 lakh.
According to a pre-budget survey conducted among different stakeholders by KPMG recently, the majority (64 per cent) of respondents expect an enhancement in the basic income tax exemption limit of Rs 2.5 lakh.
Sitharaman introduced a new tax regime in budget 2020. Under the new tax regime, the tax rates are reduced for those willing to forego tax exemptions and deductions. The new tax regime remains optional for taxpayers.
Currently, income upto Rs 2.5 is exempt from taxation under both regimes. Income between Rs 2.5 to Rs 5 lakh is taxed at the rate of 5 per cent under the old as well as the new tax regime.
Personal income from Rs 5 lakh to Rs 7.5 lakh is taxed at a rate of 20 per cent under the old regime, while under the new regime the tax rate stands at 10 per cent.
Income between Rs 7.5 lakh to Rs 10 lakh is taxed at a rate of 20 per cent in the old regime, while in the new regime the tax rate stands at 15 per cent.
An individual with a net taxable income of up to Rs 5 lakh is allowed to avail tax rebate of up to Rs 12,500 under Section 87A in both the old as well as the new tax system.
Share on Facebook «||» Share on Twitter «||» Share on Reddit «||» Share on LinkedIn