Harsh Bhuta, Partner, Bhuta Shah & Co., notes that changes in the structure of both regimes are anticipated. “There have been no substantial changes in the income tax slabs and rates under both the old tax regime and the default tax regime in recent years. A rational reduction in personal income tax rates could enhance disposable incomes, leading to increased consumption and improved compliance. Raising the basic exemption limit and revising the surcharge threshold would encourage a larger number of individuals to participate in the formal tax system”, he adds.
According to Dinkar Sharma, Company secretary & partner, Jotwani Associates, for taxpayers who continue to benefit from the old regime’s deductions and exemptions, any relief in terms of increased limits or new incentives would be welcome. This could include higher limits for deductions under Sections 80C, 80D, and others. Given the inflationary pressures, the government may consider aligning these thresholds with current economic realities to provide meaningful relief.
“The new tax regime could see revisions to its income tax slabs, such as raising the exemption limit or introducing lower rates for middle-income earners. These changes would make the regime more attractive, potentially encouraging more taxpayers to shift from the old regime. Such adjustments could also align with the government’s broader goal of simplifying taxation”, Sharma further adds.
