Union Budget 2023: All about tax slabs in new income tax regime | Explained
Union Budget 2023: The income tax slabs for a financial year are announced by the Union Finance Minister every year in the Union Budget. The common man eagerly awaits for the same every year, for it would have a major impact on the pocket in the year ahead.
The government has increased the income tax rebate limit to Rs 7 lakh from Rs 5 lakh under the new tax regime. Finance Minister Nirmala 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.
In Budget 2020-21, the government had introduced optional income tax regime under which individuals and Hindu Undivided Families were to be taxed at lower rates if they did not avail specified exemptions and deductions such as house rent allowance (HRA), interest on home loan, investments made under Section 80C, 80D and 80CCD. Under this, total income up to Rs 2.5 lakh was tax-exempt.
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The income tax system in our country is based upon a taxpayer depending on his/her income level. However, from 2020-21 FY, the method of levying taxes changed and a new tax regime was announced. Under this, tax rates were reduced, besides a huge cut in tax saving opportunities.
You may be thinking whether you fall in old or new tax regime and which is better? So, let’s read on what are the differences between the two and which system is deemed fit for you.
Union Budget 2023: Old income tax slab vs new slab
New tax slabs
There will be no tax for income up to Rs 3 lakh
Income between Rs 3 and Rs 6 lakh will be taxed at 5 per cent
Income between between Rs 6 and 9 lakh will be taxed at 10 per cent
Income between Rs 9 and Rs 12 lakh will be levied tax at 15 per cent
Income between Rs12 and Rs 15 lakh will have tax at 20 per cent
Income of Rs 15 lakh and above will be taxed at 30 per cent
Old tax slabs
Income up to Rs 2.5 lakh is exempt from taxation under old tax regime
Income between Rs 2.5 lakh and Rs 5 lakh is taxed at the rate of 5 per cent
Personal income from Rs 5 lakh to Rs 7.5 lakh is taxed at rate of 15 per cent
Income between Rs 7.5 lakh and Rs 10 lakh is taxed at a rate of 20 per cent
Income above ₹10 lakh is taxed at 30 per cent
The new tax regime is the default one. However, one can also avail the benefits of the old regime on opt-out basis, says FM Nirmala Sitharaman.
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These slabs will be modified as per the Budget announcement with effect from April 1.
- With inputs from agencies