Possibility to increase the standard reduction limit from 75 thousand to one lakh

New Delhi| With the intention of abolishing the old tax system, the government will make the new tax system more attractive for taxpayers in the upcoming general budget. The government plans to add new tax slabs to the new system and also increase the standard deduction limit along with the income tax free income limit. In the same general budget, the government is also considering abolishing the old tax system in the coming financial year or a year after it.

According to government sources, in the general budget of the year 2020, the new tax system was introduced to eliminate the old tax system itself. Then the government’s plan was to make tax payment easier through this system as well as to get rid of the old tax system. At the top level, the possibility of abolishing the old tax system is being considered in this general budget. Government source says that if an announcement to this effect is not made in this general budget, then the general budget to be presented next year will definitely announce the abolition of the old tax system. The government is also focused on reducing and controlling the fiscal deficit through the provisions of the general budget. The fiscal deficit target for the current fiscal year was set at 4.9 per cent. In this general budget, a new target can be set to control it by 4.5 per cent.

The government’s focus in the general budget is the new tax system. The government is considering expanding the scope of tax free income and increasing the 20 percent tax bracket from 12-15 lakhs to 12-20 lakhs. Apart from this, the government plans to increase the scope of standard deduction from Rs 75 thousand to Rs 1 lakh.

In the full budget of the third term of the Modi government presented in July last year, there was no change in the limit of tax free income (3 lakh). However, the slab with 5 per cent income tax was then increased from Rs 3 to Rs 6 lakh to Rs 3 to Rs 7 lakh. The scope of the standard deduction was then increased from 50 thousand to 75 thousand rupees.

The tax relief was also signaled by the government’s sudden decision to set up an 8th Pay Commission. After the implementation of the Commission’s report next year, the salaries of central personnel are estimated to increase by 30 to 40 per cent. In such a situation, without tax relief, central employees will not get any special benefit. Apart from this, after the average performance in the last Lok Sabha elections, the government had planned to provide relief to the middle class and lower middle class.