Budget 2023 Income Tax slabs explained: Who will pay zero tax; what if your salary is Rs 9 lakh?
By Sunita Iyer | First Published Feb 1, 2023, 2:07 PM ISTFinance Minister Nirmala Sitharaman on Wednesday 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 Rs 7 lakh under the new tax regime.
Finance Minister Nirmala Sitharaman on Wednesday 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 Rs 7 lakh under the new tax regime.
Latest Videos
The FM also allowed taxpayers a Rs 50,000 standard deduction under the new regime, where assessees cannot claim deductions or exemptions on their investments. She also tweaked the concessional tax regime, introduced initially in 2020-21, by hiking the tax exemption limit by Rs 50,000 to Rs 3 lakh and reducing the number of slabs to five.
In the Budget for 2023-24, Sitharaman said currently, individuals with a total income of up to Rs 5 lakh do not pay any tax due to rebates under both the old and new regimes.
Personal for the hardworking middle class
Currently, those with an income of Rs 5 lakhs do not pay any income tax and I proposed to increase the rebate limit to Rs 7 lakhs in the new tax regime
Finance Minister
pic.twitter.com/4PBNa3KsG5
"It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to Rs 7 lakh," Sitharaman said.
She further said under the new personal income tax regime, the number of slabs would be reduced to five.
"I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs 3 lakh," Sitharaman said.
Income tax slabs under the new regime:
Under the revamped concessional tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5 per cent; Rs 6-9 lakh at 10 per cent, Rs 9-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent.
"I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500," Sitharaman said.
The new income regime has become the default tax regime. However, individuals will still have the option to continue with the old income tax regime. This will provide significant relief to all taxpayers in the new regime.
In 2020, the New Personal Income Tax Regime was introduced 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 lakhs. pic.twitter.com/gPsWwNsADJ
An individual who earns Rs 9 lakh annually will be required to pay only Rs 45,000, which is only 5 per cent of their income. It is a reduction of 25 per cent on what they pay currently, i.e. Rs 60,000. Similar to the previous example, someone making Rs 15 lakh would only have to pay Rs. 1.5 lakh, or 10% of their income, represents a 20% reduction from their current liability of Rs. 1,87,500.
Also read: Budget 2023: Memes flood social media after Sitharaman announces new tax slabs
The government has also reduced the surcharge of the highest rates from 37 per cent now to 25 per cent on income above Rs 5 crore in the new tax regime. The maximum tax rate, which is currently 42.74 per cent and one of the highest in the world, would drop to 39 per cent as a result. No change in surcharge is proposed for those who opt to be under the old regime in this income group.
(With inputs from PTI)
subscribe to Asianet Newsable WhatsApp channel by clicking here. For more reliable and latest news
subscribe to Asianet Newsable Telegram channel by clicking here.