At the same time, there are indications that there may not be any major surprises in terms of tax benefits and deductions in the Union Budget this time as well. Individuals may not get substantial exemptions. There is debate over whether personal income tax rates should remain the same.
This time the budget may include steps to attract more investment to the country. Support for small businesses may continue. Further measures may be taken with an aim to stimulate economic growth. It is also noteworthy whether there will be measures to encourage private consumption. There is a growth of 28.1 percent in personal income tax and refunds between April and November 2022. The growth in corporate income tax collection during the same period was 24.5 percent.
If the income tax threshold is raised in the budget, more money will be available for individuals to invest. The disadvantage of the new slab is that the salary earners will not benefit significantly due to the change to the new income tax system. No new significant deduction is available for items like investment under 80C of the Income Tax Act, health insurance (80D), house rent allowance, leave travel allowance, standard deduction.
The reason is that the benefit of the tax relief provisions will be different for many people. But those who take maximum advantage of such exemptions have less tax liability under the old system. It is sufficient to pay tax on the amount less than that amount of income availed of exemptions. There are also discussions on reforms to be made in the new and old regimes of personal income tax. It is indicated that the confusion regarding this may be resolved through this budget.
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