Middle class wage earners are the main source of tax revenue for the government. Sitharaman has not increased the tax burden of this category in the last few years. But due to rising inflation and other challenges like healthcare costs, the category is in trouble. Even the two systems of income tax of the government have not made much difference in this category. However, this added to the confusion. In both the systems, income up to Rs 2.5 lakh is exempt from income tax. However, if a person earns up to Rs.5 lakh, he does not have to pay income tax. This is due to exclusion of Rs 12,500 under Section 87A. People have been waiting for a long time to raise the basic tax exemption limit. They want to make it from Rs 2.5 lakh to Rs 5 lakh or so.
With the Finance Minister’s latest statement, the hope of raising the income tax threshold has also increased. She has also said that she belongs to the middle class. So she understands the pressures of the middle class. She considers herself middle class. That’s why she understands this. Sitharaman’s statement two weeks before the public budget presentation has raised the hopes of the middle class. They are beginning to feel that Sitharaman’s focus will be on them in this budget.
There is no change in income tax slab from 2014 onwards
Income tax slab remains unchanged from 2014 onwards. The basic personal tax exemption limit was last revised in 2014. Then when presenting the first budget of the Modi government, the then Finance Minister Arun Jaitley increased it from Rs 2 lakh to Rs 2.5 lakh. Sitharaman has not made any changes in tax slabs and rates. But he introduced a new tax regime in the 2020 budget. Tax rates were low. But this had to wash away the tax exemption and deduction. That is, those opting for the new system of income tax will not be able to avail the tax relief and deduction. Either of the two settings can be selected.
What concessions does the middle class want?
The demand of the middle class is that the exemption limit under Section 80C should be raised to Rs 1.5 lakh. There has been no amendment to this over the years. A number of tax saving options have been put in place under the threshold of Rs 1.5 lakh, which takes little time to fill. The salaried middle class wants some tax breaks on personal loans like education loans. Now he needs a personal loan to do many of his jobs.
Sitharaman will present the budget for the financial year 2023-24 in the Lok Sabha on February 1. There is every expectation that they will raise the income tax ceiling in this budget. Along with this, apart from the middle class taxpayers, other people will also get some relief. His assurance that the government can do more for the middle class because of its size is indicative of this. “I understand their problems very well. The government has done a lot for them and will continue to do so. It remains to be seen how Sitharaman fulfills the expectations of the middle class. This is the fifth budget of the Modi government’s second term with Sitharaman. This will be the last full budget of this government before the Lok Sabha elections next year.