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Union Budget 2023: 1 crore in Rs 5-7 lakh income range set to gain from new tax regime

NEW DELHI: Close to one crore individuals in the Rs 5-7 lakh income range stand to gain from the government’s decision to increase the rebate level to Rs 7 lakh under the new tax regime, data available with the finance ministry showed.
Several of these individuals are unable to use the benefits available for investment in specified savings instruments, such as public provident fund or 5-year fixed deposits, increasing their tax liability, government sources told TOI. “These individuals will not have to pay any tax, irrespective of the amount of deductions that they are able to claim due to the savings. We also need to factor in that savings increase as the income level goes up, as you have higher disposable income,” said a finance ministry official.
In her fifth budget, presented on Wednesday, finance minister Nirmala Sitharaman sweetened the new tax regime for individuals as it had failed to find the desired traction. The increase in exemption limit from Rs 2.5 lakh to Rs 3 lakh under the new regime will nudge taxpayers to transition.

The government has argued that the total tax outgo will be lower at all income levels.
There are over six crore taxpayers in India and now those with income above Rs 3 lakh, even if they do not have any liability, will be required to file returns. Till the end of March 2022, close to 6.4 crore returns had been filed by individuals, with over Rs 84,000 crore revenue foregone on account of deductions on investments and investments under section 80C of the Income Tax Act.

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