Income tax regime without exemptions may see overhaul with new tax slabs
The central government has held discussions to overhaul the new personal income tax regime without exemptions, with a new plan expected to be announced in the budget on 1 February. One of the proposals examined was to add more slabs to the new income tax scheme so that the income range covered in each slab is narrower, preventing taxpayers with diverse incomes from clustering in wide slabs. Currently, there are six slabs in the new personal income tax regime, while the old tax filing regime has only three slabs.
Why it’s important: The new tax regime without exemptions has seen few takers till now. The challenge for the government is to make it more acceptable by keeping it simple, while ensuring that it is revenue-neutral for the exchequer.
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