Not anything out of the ordinary

The change in exemption limit was more or less overdue as the existing regime was created 21 years back in the Vajpayee era in 2002. As India’s middle class and economy have exponentially grown, this is somewhat of a good step

he budget this fiscal year is not anything out of the ordinary in terms of direct taxes, however, the limit of taxable slabs has been increased but the rate of taxation still remains constant.

The basic exemption limit has been hiked to Rs3 lakh from Rs2.5 currently under the new income tax regime. Further, the income tax slabs in the new tax regime have been changed.

The budget states that 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. People who choose the new income tax system and earn up to Rs7 lakh will be exempted from paying income tax.

This in turn will be a great thing for income taxpayers as they will have more disposable income to spend, save and invest. I can safely say that the interests of the taxpayers and the middle class have been taken into consideration and will provide the average Indian household with slightly higher spending power.

The new tax regime will allow the people who could not take advantage of the existing tax breaks and deductions and moreover, for salaried taxpayers, it also lessens their compliance burden.

However, there is a possibility that to make up for the exemptions in the new tax regime, the government may shift the burden on indirect taxes by pumping up rates of GST or excise, additionally, the government may increase the borrowing from the markets and the general public by issuing additional bonds.

Finally, I would like to say that the budget from a tax standpoint is not revolutionary but a much-needed relief to the Indian middle class.