Finance Minister Nirmala Sitharaman announced a slew of measures for taxpayers in Budget 2023. With a hike in the basic exemption limit and rebate and tweaks to the income tax slabs, Sitharaman has made the new income tax regime attractive for salaried individuals. Budget 2023 has also introduced standard deductions in the new tax regime.
“Personal income tax has seen substantial changes after a very long time, which will benefit the middle class. This country has been waiting for direct taxation to be simplified and compliance to be made easier,” Sitharaman told after presenting Budget 2023.
Rebate increased to Rs 7 lakh under the new tax regime
The limit of total income for rebate under section 87A of the Income-tax Act, 1961 has been increased from Rs 5 lakh to Rs 7 lakh for those opting for the new tax regime. Simply put, if your taxable income is below Rs 7 lakh, you do not have to pay any income tax in the new tax regime.
Hike in basic exemption limit in new the tax regime
The basic exemption limit under the new tax regime has been revised from Rs 2.5 lakh to Rs 3 lakh. Individuals with an income of up to Rs 3 lakh do not have to pay any income tax under the new income tax regime.
New income tax slabs
Budget 2023 tweaked the income tax slabs under the new tax regime. The maximum exemption limit will be Rs 3 lakh and for every additional Rs 3 lakh income, the next slab rate will apply.
Standard deduction introduced in the new tax regime
Budget 2023 has also extended a standard deduction of Rs 50,000 under the new regime which is available in the old tax regime. Individuals with taxable income of up to Rs 7.5 lakh will not have to pay any taxes if they choose the new tax regime in FY 2023-24.
Surcharge reduced for the super-rich
In the new tax regime, the highest rate of surcharge of 37 per cent on income above Rs 5 crore is reduced to 25 per cent.
