FM Sitharaman says no income tax is to be paid under 7.27 lakh p.a annum income

The Union Finance Minister Nirmala Sitharaman highlighted that the government has implemented numerous tax advantages to benefit individuals in the middle-income bracket. These measures include granting income tax exemption to those with annual earnings of up to Rs 7.27 lakh.

While emphasising the government’s commitment to inclusivity, she stated that every segment of society has been considered. She acknowledged that there were concerns expressed by some groups regarding the decision to introduce income tax exemption for individuals earning up to Rs 7 lakh in the Union Budget 2023-24.

She further highlighted that the scepticism primarily revolved around the concerns regarding individuals earning slightly above Rs 7 lakh. In response to these concerns, the government conducted a thorough analysis as a team to determine the tax implications for each incremental rupee earned. For instance, no tax is levied on earnings up to Rs 7.27 lakh. However, the taxation point begins at Rs 7,27,000, after which individuals are liable to pay taxes on their income.

Sitharaman pointed out that the new scheme addresses another concern about the absence of a standard deduction. She clarified that a standard deduction of Rs 50,000 is now provided under the revised system, which was previously lacking. The government aimed to simplify the tax-paying process and enhance compliance measures, thus addressing the grievances raised.

Under the new tax regime, individuals are not required to pay income tax on their annual earnings up to Rs 7 lakh from FY 2023-24. Furthermore, including marginal relief provisions, this threshold effectively extends to Rs 7.27 lakh. As a result, individuals falling within this income range can benefit from tax exemption under the new regime.

Additionally, a standard deduction of Rs 50,000 has been implemented as part of the new income tax regime. This deduction allows individuals to reduce their taxable income by that amount, providing a benefit when calculating their taxes.

Shifting the focus to the ‘Public Procurement Policy for Micro and Small Enterprises’ scheme, Sitharaman mentioned that there has been a significant achievement in terms of procurement from MSMEs. She highlighted that 33% of the total procurement made by 158 Central Public Sector Enterprises had been sourced from MSMEs, which marks the highest procurement percentage to date.

Sitharaman explained the introduction of the TReDS platform (Trade Receivables Discounting System), which aims to address liquidity challenges faced by MSMEs and other corporations resulting from non-payment by their buyers. The platform facilitates the discounting of trade receivables, ensuring that MSMEs and businesses can access necessary funds and not encounter financial constraints.

Sitharaman highlighted the positive impact of the ONDC (Open Network for Digital Commerce) in expanding the market reach of MSME businesses. She emphasised that the platform has enabled these businesses to connect with a larger pool of potential customers. Furthermore, she mentioned that India’s establishment of a public platform like ONDC, which is comparable to global e-commerce giants like Amazon, has garnered appreciation from around the world.

Sitharaman highlighted that India’s endeavours to enhance the ease of doing business have received recognition at the global level. She noted that the country’s position in the World Bank’s Ease of Doing Business Index has significantly improved, rising from 142 in 2014 to 63 in 2019. This substantial leap in ranking signifies India’s progress in creating a more favourable business environment and attracting investments.

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