Some significant tax breaks for corporations and individual taxpayers may be phased out by the government. In the forthcoming Union Budget 2022-23, a blueprint for this could be presented.

In the forthcoming Union Budget, it's possible that the Centre could propose phasing out various tax exemptions for corporate and individual taxpayers.

This is one of the major tax measures being debated ahead of Finance Minister Nirmala Sitharaman's February 1, 2022 budget announcement. The Business Standard newspaper reported on the development.

Based on an internal assessment by the government, a top policymaker told the publication that the percentage of corporates and individuals shifting to the new income tax regime without exemptions has been “very encouraging” and more people are expected to make the switch in coming years.

In light of the findings, the policymaker stated that the finance ministry is looking at the possibility of lowering capital gains tax rates. The official went on to explain that the transition to the new system will be gradual and that so far, the movement has been positive.

According to the source, as more people and businesses transition to the new income tax system, the government will gradually phase out specific exemptions.

In light of the findings, the policymaker stated that the finance ministry is looking at the possibility of lowering capital gains tax rates. The official went on to explain that the transition to the new system will be gradual, and that so far, the movement has been positive.

According to the source, as more people and businesses transition to the new income tax system, the government will gradually phase out specific exemptions.

What the salaried class wants from the government in the Union Budget 2022-23

For individuals earning between Rs 5 lakh and Rs 7.5 lakh, the rate was dropped to 10% from 20% under the new income tax regime; for those earning Rs 7.5 lakh to Rs 10 lakh, the rate was decreased to 15% from 20%. Tax cuts on incomes up to Rs 15 lakh were also announced, while the rate for those earning more than Rs 30 lakh remained intact at 30%.

According to the policymaker, corporate tax exemptions are likely to be phased out sooner than personal tax exemptions. While announcing the budget, Nirmala Sitharaman could declare a timeline for the progressive phase-out of these exemptions.