Income tax slabs revamped; rebate limit increased to ₹7 lakh under new tax regime
February 1, 2023
The new income tax regime will now become the default option, but people will still have the option to go for earlier regime, she said
Finance Minister Nirmala Sitharaman, in the Union Budget 2023-24 presented on Feb. 1, tweaked the slabs to provide some relief to the middle class by announcing that no tax would be levied on annual income of up to ₹7 lakh under the new tax regime.
She also allowed a ₹50,000 standard deduction to taxpayers under the new regime, where assesses cannot claim deductions or exemptions on their investments.
Ms. Sitharaman presented her fifth Union Budget on February 1, for the year 2023-24. She said that the Budget proposals for this financial year rest on inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power, and the financial sector.
Here is a list of announcements relating to the Income Tax, announced in the Budget.
1. There were six income slabs starting from ₹2.5 lakh. Now, the tax slabs have been reduced and the limit has been raised the limit to ₹3 lakh.
2. No tax for income up to ₹3 lakh; 5% tax on ₹3-6 lakh; 10% tax on ₹6-9 lakh, 15% tax on ₹9-12 lakh, 20% tax on ₹12-15 lakh and 30% on income above ₹15 lakh under new I-T regime.
3. The limit of ₹3 lakh for tax exemption on leave encashment on government salaried employees. That was set in 2002 when government salaries were lower and is now being raised to ₹25 lakh.
4. The Government proposes to increase the income tax rebate limit from ₹5 lakh to ₹7 lakh in the new tax regime.
5. A person earning ₹9 lakh a year will now be paying just ₹45,000 instead of ₹60,000 currently. An individual with income of ₹15 lakh will have to pay ₹1.5 lakh tax down from ₹1.87 lakh under new tax structure.
6. The highest tax rate in our country is 42.74%, it is among the highest in the world. The highest surcharge rate will be reduced from 37% to 25% in the new tax regime. This will result in the reduction of the maximum tax rate to 39%.
7. Proposal to extend ₹50,000 standard deductions to salary earners under the new tax regime.
8. The new income tax regime will now become the default option, but people will still have the option to go for earlier regime.