New Delhi: Nirmala Sitharaman, Finance Minister, is presenting the Union Budget for 2023 in Parliament. This is the final full-year budget before the 2024 national elections and key state elections later this year. Union Budget 2023-24, like the previous two Budgets, will be delivered paperless.
To provide relief to taxpayers, the finance minister proposed changing the tax structure in the new personal Income Tax Budget 2023 regime by reducing the number of slabs to 5 and increasing the tax exemption limit to 3 lakhs.
“The rebate under section 87A of new income regime hiked to ₹7 lakh,” said Finance Minister while presenting Budget 2023.
The five changes to income tax rules announced by Finance Minister Nirmala Sitharaman in Budget 2023
1) Tax rebate limit raised to ₹7 lakh from ₹5 lakh
“Under the new tax scheme, the refund has been increased to Rs. 7 lakh. The new information technology system will serve as the tax regime by default. Tax assessors will be able to continue using the previous regime. Salaried and pensioners: the standard deduction under the new system for taxable income exceeding Rs.15.5 lakhs is Rs.52,500. The six income categories will be reduced to five under the new system: basic exemption up to three lacs, 3-6 lakh 5%, 6-9 lakh 10%, and 9-12 lakh 15%. “Amit Gupta, MD, SAG Infotech, stated that 12-15 lakhs is 20%, while 15 lakhs or more is 30%.”
2) Changes in Income Tax slabs
0-3 lakh – NIL
3-6 lakh – 5%
6-9 lakh- 10%
9-12 lakh – 15%
12-15 lakh – 20%
Above 15 lakh- 30%
3) New Income Tax regime to be default regime
“The government is actively promoting the new tax regime, which is now the default tax regime. The basic exemption under this regime has been increased from 2.5 lakhs to 3 lakhs. Individual taxpayers earning up to 7 lakhs will not be required to pay taxes, up from the current limit of 5 lakhs. The maximum marginal tax rate has been reduced from 42.74% to 39% under the new tax regime,” said Saraswathi Kasturirangan, Partner, Deloitte India.
4) An Individual with an annual income of 9 lakhs will be required to pay only 45,000.
5) The maximum tax, including the surcharge, will be 39%.
The country’s current tax rate is 42.74%, making it one of the highest in the world. In the new tax regime, Budget23 proposes lowering the highest surcharge rate from 37% to 25%. As a result, the maximum tax rate will be reduced to 39%.
In addition, the Finance Minister announced that the average processing time for income tax returns has been reduced from 93 days to 16 days.
The income tax brackets have not been changed since 2014. In 2014, the basic personal tax exemption limit was last revised.