New Delhi (01.02.2023): Union Finance Minister Nirmala Sitharaman has given some relief in the last full budget before 2024 LS Polls as the basic exemption limit has been increased to Rs 3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Income Tax slabs in the new tax regime too have been changed.
As per the announcement, 5 Income Tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs 5 lakh to Rs 7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs 7 lakh will not pay any taxes.
The income tax slabs under the new income tax regime will be as follows:
- a) Rs 0 to Rs 3 lakh - 0% tax rate
- b) Rs 3 lakh to 6 lakh - 5%
- c) Rs 6 lakh to 9 lakh - 10%
- d) Rs 9 lakh to Rs 12 lakh - 15%
- e) Rs 12 lakh to Rs 15 lakh - 20%
- f) Above Rs 15 lakh - 30%
Further, the new income tax regime becomes the default tax regime. However, the individuals will have an option to continue with the old income tax regime. The government has reduced the surcharge of the highest rate from 37 per cent currently to 25 per cent in the new tax regime.
What are the current Income Tax slabs?
- Nil Up to Rs 2.5 lakh NIL
- 5% From Rs 2,50,001 to Rs 5 lakh 5%
- 20% From Rs 5,00,001 to Rs 7.5 lakh 10%
- From Rs 7,50,001 to Rs 10 lakh 15%
- 30% From Rs 10,00,001 to Rs 12.5 lakh 20%
- From Rs 12,50,001 to Rs 15 lakh 25%
- From Rs 15,00,001 and above 30%
The new tax regime was announced in Budget 2020 and became effective from the financial year 2020-21 (April 1, 2020).
Currently, a salaried individual gets the option to opt for the old tax regime and continue to avail common tax deductions and tax exemptions. Else, he/she can opt for the new concessional income tax regime, without any common tax deductions and tax exemptions. Under the new tax regime, the individual will forego 70 deductions and tax exemptions, which includes HRA tax exemption, LTA tax exemption, deduction up to Rs 1.5 lakh under Section 80C and so on.
Do keep in mind that under both the tax regimes the basic tax exemption limit is Rs 2.5 lakh for individuals below the age of 60 years during the financial year. However, for senior citizens (above 60 years but below 80 years) and super senior citizens (above 80 years of age) the basic tax exemption limit is Rs 3 lakh and Rs 5 lakh, respectively, in the old tax regime. In the new tax regime, the basic tax exemption limit is Rs 2.5 lakh irrespective of the age of the taxpayer.