Budget 2023 has provided a rebate on income earned up to Rs 7 lakh, up from Rs 5 lakh earlier. Those earning income of up to Rs 7 lakh will not have to pay any tax. To be sure, this will help only those whose income is up to Rs 7 lakh.
|RS 3 LAKH – 6 LAKH||5%|
|RS 6 LAKH – 9 LAKH||10%|
|RS 9 LAKH -12 LAKH||15%|
|RS 12 LAKH – 15 LAKH||20%|
|Above Rs. 15 Lakh Income||30%|
The basic exemption limit in the new tax regime has been raised to Rs 3 lakh, from Rs 2.5 lakh earlier. This move will help all taxpayers who opt for the new tax regime.
The number of slabs under the new income tax regime has now come down to five from six. Income of up to Rs 3 lakh carries no tax liability. On income of Rs 3-6 lakh, the tax rate is 5 percent. Income of between Rs. 6 lakh and Rs. 9 lakh will be taxed now at 10 percent. On income of Rs. 9-12 lakh, the tax rate is now 15 percent. Income of Rs. 12-15 lakh will be taxed at 20 percent. And for those whose income is above Rs 15 lakh, the tax rate is 30 percent.
Budget 2023 has given a big boost to the new income tax regime
What this means is that for an individual who earns Rs 9 lakh, his or her tax liability comes to Rs 45,000, down from Rs 60,000 earlier.
For salaried individuals and pensioners under the new income tax regime, a standard deduction has been introduced. Sitharaman said the benefit would be equivalent to Rs 52,500.
Peak rate surcharge comes down
To give relief to the highest taxpayers, and also those who switch to the new income tax regime, Sitharaman brought down the surcharge in the highest tax bracket (with the highest surcharge rate), down to 25 percent from 37 percent earlier.
So, the effective tax rate in the highest tax bracket is now 39 percent, from 42.74 percent earlier.