Budget 2023 new income tax slabs: How to calculate your tax
New income tax regime 2023: In the mew income tax regime, there is no income tax up to ₹7 lakh. The tax slabs have been tweaked with the lowest starting from ₹2.5 lakh instead of ₹3 lakh as earlier.
In a big relief for the middle class, finance minister Nirmala Sitharaman on Wednesday announced five income tax measures in the last full budget of the government before the 2024 Lok Sabha elections. With the new announcements, calculations for your income tax will change. Follow LIVE updates
Watch: Budget 2023: Big relief for taxpayers ; No tax for income up to ₹7 lakh | Check revised rates here
Here is all you need to know:
1. People earning up to ₹7 lakh annually will not pay any income tax in the new tax regime as the personal income tax rebate limit has been increased to ₹7 lakh from 5 lakh.
Union Budget 2023-24: What's cheaper and what's costlier? Here is the full list
2. New income tax slabs:
3. New regime vs old regime
The new income tax regime will be the default tax regime while the citizens will have the option to be in the old regime as well, the finance minister announced. Old tax regime allows PPF, NPS and some other concessions. So people above the 7 lakh annual income will have to judiciously choose between the new and old regimes. The benefits of the standard deduction has been introduced to the new regime.
4. Calculation: How much do you save?
An individual with ₹9 lakh annual income will pay ₹45,000 tax which is 5% of the salary -- a reduction of ₹15,000 from the present ₹60,000. A person with ₹15 lakh annual income will have to pay a tax of ₹1.5 lakh down from 1.87 lakh.
5. Highest income surcharge reduced from 37% to 25%. “The Current tax rate in the country is 42.74%, among the highest in world. Budget23 proposes to reduce the highest surcharge rate from 37% to 25% in the new tax regime. This will result in the reduction of the maximum tax rate to 39%,” Sitharaman announced.
6. The limit of ₹3 lakh for tax exemption on Leave Encashment limit raised to ₹25 lakh.
7. Individuals with income of ₹15.5 lakh and above have been made eligible for astandard deduction of ₹52,500 in thenew tax regime in Budget 2023.