Budget 2023: Big relief for middle class! Tax rebate limit increased to Rs 7 lakh

Through this year's Union Budget, Finance Minister Nirmala Sitharaman delivered one of the most significant statements. She declared that under the new tax system, the income tax refund maximum will increase from Rs. 5 lakh to Rs. 7 lakh. She continued by saying that the new tax system will now be used by default. The choice to continue with the previous tax system would be available.

Big relief for middle class! Union Finance Minister Nirmala Sitharaman has proposed a new tax regime, under which income tax rebate limit has been increased from Rs 5 lakh to Rs 7 lakh. While presenting the Budget in the Parliament, she said, “I introduced in 2020, the new personal income tax regime with 6 income slabs, starting from Rs 2.5 lakh. I propose to change the tax structure in this regime by reducing the number of slabs to 5 and increasing the tax exemption limit to Rs 3 lakh."

She further said that the Government has made new tax regime the default tax regime but citizens will have the option to opt for the old regime.

Check out the new tax regime:

Rs 0-3 Lakhs - Nil
Rs 3-6 Lakhs - 5%
Rs 6-9 Lakhs - 10%
Rs 9-12 Lakhs - 15%
Rs 12-15 Lakhs - 20%
Above Rs 15 Lakhs - 30%

Under the new tax regime, a person earning Rs 9 lakh per annum will have to pay Rs 45,000 tax. The current 80C deduction cap was set at Rs. 1.5 lakh. The Income Tax Act's Section 80C is a tax-saving alternative that has been shown to be advantageous to taxpayers. By utilising tax-saving tools, it enables them to reduce their taxable income.

The average processing period for income tax returns would be cut from 93 days to 16 days, according to FM's further announcement. The Center plans to introduce new universal IT return forms. The government also wants to make the system for resolving complaints stronger.

She stated that a PAN card may serve as a single, universal identify for digital transactions. It is anticipated that using a PAN as a single common identity will streamline the application process for investors seeking approvals, registrations, and licences.