Union Budget 2023 Union Budget 2023: Wishlist of Personal Taxation

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The Tax Publishers Union Budget 2023: Wishlist of Personal Taxation Dr. Suresh Surana Besides corporates, India has a significant number of Individual tax return filers who would be keenly awaiting the pronouncements in the Budget 2023. As per the CBDT press release earlier, there were about 5.8 crore tax filers who filed their return of income for Financial Year 2021-22 in Individual capacity. It is expected that the upcoming Union Budget 2023 would also have a greater focus towards the tax relief measures for individual taxpayers on personal tax. Some of the key proposals expected on the personal taxation front are briefed as under: 1. Removal of the highest slab of 42.7% and restricting the same to 35.88% as very few persons are covered by the same Currently, there are as much as 10 tax slab rates for individuals in the concessional tax regime ranging from 5.2% to 42.744% considering the effective tax rates including surcharge and health and education cess. A nominal percentage of the total individual taxpayers pay tax as per the highest slab rate. Further, the highest tax rate for individuals in several developing economies such as Thailand, Indonesia, Malaysia, Philippines, Vietnam, etc. is quite less than that prevailing in India. Thus, it is expected that the highest tax bracket be restricted to 35.88% (i.e. 30% (basic tax) plus 15% (surcharge) plus 4% (cess)) so that the personal tax rates regime is also incentivized by the reduced tax rates and brought in consonance with the rationalized tax rates for corporates. Also, too many slab rates are unnecessarily complicating the taxation structure for individuals. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Union Budget 2023: Wishlist of Personal Taxation

Dr. Suresh Surana

Besides corporates, India has a significant number of Individual tax return filers who would be keenly awaiting the pronouncements in the Budget 2023. As per the CBDT press release earlier, there were about 5.8 crore tax filers who filed their return of income for Financial Year 2021-22 in Individual capacity. It is expected that the upcoming Union Budget 2023 would also have a greater focus towards the tax relief measures for individual taxpayers on personal tax. Some of the key proposals expected on the personal taxation front are briefed as under:

1. Removal of the highest slab of 42.7% and restricting the same to 35.88% as very few persons are covered by the same

Currently, there are as much as 10 tax slab rates for individuals in the concessional tax regime ranging from 5.2% to 42.744% considering the effective tax rates including surcharge and health and education cess. A nominal percentage of the total individual taxpayers pay tax as per the highest slab rate. Further, the highest tax rate for individuals in several developing economies such as Thailand, Indonesia, Malaysia, Philippines, Vietnam, etc. is quite less than that prevailing in India.

Thus, it is expected that the highest tax bracket be restricted to 35.88% (i.e. 30% (basic tax) plus 15% (surcharge) plus 4% (cess)) so that the personal tax rates regime is also incentivized by the reduced tax rates and brought in consonance with the rationalized tax rates for corporates. Also, too many slab rates are unnecessarily complicating the taxation structure for individuals.