In the Budget for 2023-24, Finance Minister Nirmala Sitharaman 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.
New Delhi: As Union Finance Minister Nirmala Sitharaman on Wednesday (February 1, 2023) announced that no tax would be levied on annual income of up to Rs 7 lakh under the new tax regime, her cabinet colleague Rajnath Singh lauded the decision and said that it will be “huge Relief to the Middle Class”. While presenting the Budget for 2023-24 in Parliament, Sitharaman also allowed a Rs 50,000 standard deduction to taxpayers under the new regime, where assessees cannot claim deductions or exemptions on their investments. The Bharatiya Janata Party (BJP) leader also tweaked the concessional tax regime, which was originally introduced 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.
“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 that 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,” the Finance Minister added.
Reacting to the development, Rajnath Singh said that the increase in the Income Tax exemption limit to Rs 7 lakh and several other tax-related reforms “will provide a huge relief” to the middle class including salaried individuals and retired people.
“I congratulate the FM and thank Pradhanmantri (Narendra Modi) ji for taking this people-friendly decision,” he said in a tweet.
“The Budget demonstrates the government’s commitment towards supporting growth and welfare-oriented policies that will benefit all sections of society including small businesses owners, farmers, and professionals alike,” the senior Bhartiya Janata Party (BJP) leader added.
New Income Tax Slab 2023-24: No Income Tax Till Rs 7 Lakh In New Tax Regime
Under the new 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%; Rs 6-9 lakh at 10%, Rs 9-12 lakh at 15%, Rs 12-15 lakh at 20%, and income of Rs 15 lakh and above will be taxed at 30%.
“I propose to extend the benefit of the 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,” FM Sitharaman said
The government in Budget 2020-21 had brought in an optional income tax regime, under which individuals and Hindu Undivided Families (HUFs) were to be taxed at lower rates if they did not avail of specified exemptions and deductions, like house rent allowance (HRA), interest on a home loan, investments made under Section 80C, 80D, and 80CCD. Under this, total income up to Rs 2.5 lakh was tax-exempt.
Currently, a 5 per cent tax is levied on total income between Rs 2.5 lakh and Rs 5 lakh, 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs 10 lakh to Rs 12.5 lakh, 25 per cent on Rs 12.5 lakh to Rs 15 lakh, and 30 per cent on above Rs 15 lakh.
The scheme, however, has not gained traction as in several cases it resulted in higher tax burden.
With effect from April 1, these slabs will be modified as per the Budget announcement.
