In her record eighth consecutive budget, finance minister Nirmala Sitharaman announced that individuals with an income up to Rs 12 lakh will not have to pay income tax. This move will save citizens Rs 1 lakh crore in direct taxes and Rs 2,600 crore in indirect taxes. The income tax exemption limit has seen a steady increase since 2005, with this latest increase being a major relief for the middle class. Before presenting the budget, Sitharaman met with President Droupadi Murmu as per traditional practice.
Income Tax Exemption Raised to Rs 12 Lakh: A Major Relief for Middle Class
Background
The Government of India has consistently increased the income tax exemption limit over the past two decades. In 2005, the limit stood at Rs 1,50,000. In the 2023-24 budget, Finance Minister Nirmala Sitharaman announced a significant increase in the exemption limit to Rs 12 lakh for individuals.
Current Announcement
In her record eighth consecutive budget, Sitharaman stated that "individuals with income up to Rs 12 lakh will not have to pay income tax." This decision is expected to provide a major relief to the middle class, benefiting approximately 3 crore taxpayers.
Benefits and Implications
The increased exemption limit will result in savings of Rs 1 lakh crore in direct taxes and Rs 2,600 crore in indirect taxes for citizens. It is estimated that approximately 70% of taxpayers will fall under the new tax-free bracket.
The move is seen as a positive step towards reducing the tax burden on the middle class and stimulating economic growth. It may also encourage greater investment and consumption, benefiting various sectors of the economy.
Top 5 FAQs Related to Income Tax Exemption
1. What is the current income tax exemption limit? A: Rs 12 lakh for individuals
2. What is the tax slab structure? A:
3. Can I still claim deductions and exemptions? A: Yes, deductions for standard exemption under Section 80C, house rent allowance, and other eligible expenses can still be claimed.
4. What about previous years' income tax returns? A: The increased exemption limit is applicable from the financial year 2023-24 onwards.
5. What is the impact on other taxes, such as GST? A: The increased income tax exemption may have an indirect impact on GST collections as it will lead to higher disposable income for taxpayers.
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