Financial Minister Nirmala Sitharaman on Wednesday (1 February) presented the Budget 2023-24 in the Parliament.
In her Budget speech, the Finance Minister proposed to increase the income tax rebate limit to Rs 7 lakh from current Rs 5 lakh under the new tax regime.
Further, the new tax regime will be the default tax system and the income taxpayers will now have to opt for the old regime.
The income tax slabs under the new tax regime, which was introduced in 2020, have also been changed.
Budget 2023 Tax Slabs Announced
0-3 lakh: Nil
3-6 lakh: 5 per cent
6-9 lakh: 10 per cent
9-12 lakh: 15 per cent
12-15 lakh: 20 per cent
Above 15 Lakh: 30 per cent
Here are the other important announcements related to the New Tax Regime in the budget:
The new tax regime for Individual and HUF, introduced by the Finance Act 2020, is now proposed to be the default regime.
The regime would also become the default regime for association of persons (AOP) (other than co-operative), body of individuals (BOI) and artificial judical person (AJP).
The aforementioned taxpayers, who are not willing to be taxed under this new regime, can opt to be taxed under the old regime. For those person having income under the head “profit and gains of business or profession” and having opted for old regime can revoke that option only once and after that they will continue to be taxed under the new regime. For those not having income under the head “profit and gains of business or profession”, option for old regime may be exercised in each year.
Standard deduction of Rs 50,000 to salaried individual, and deduction from family pension up to Rs 15,000, is currently allowed only under the old regime. The Budget proposes to allow these two deductions under the new regime also.
Surcharge on income-tax under both old regime and new regime is 10 per cent if income is above Rs 50 lakh and up to Rs 1 crore, 15 per cent if income is above Rs 1 crore and up to Rs 2 crore, 25 per cent if income is above Rs 2 crore and up to Rs 5 crore, and 37 per cent if income is above Rs 5 crore.
The Budget 2023 proposes that for the taxpayers under the new regime, surcharge would be same except that the surcharge rate of 37 per cent will not apply.
"Highest surcharge shall be 25 per cent for income above
Rs 2 crore. This would reduce the maximum rate from about 42.7 per cent to about 39 per cent," according to the Budget document.
No change in surcharge is proposed for those who opt to be under the old regime.
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