Union Budget 2023: Income Tax Slabs Revised, Rebate Increased To Rs 7 Lakh

Budget 2023-24: Union Finance Minister Nirmala Sitharaman announced that the new tax regime will now be the default tax regime. Presenting her fifth Budget 23, "This is the first Budget in Amrit Kaal, " she stated.

The Finance Minister while announcing much-awaited Income Tax slabs and rates for salaried employees, she also announced an increase in the income tax rebate limit from Rs 5 lakh to Rs 7 lakh under the new tax regime.

FM announces reduction in tax slabs to 5 from existing 6 in new tax structure; raises tax exemption limit to Rs 3 lakh from Rs 2.5 lakh.

“Currently, those with an income of Rs 5 lakh do not pay any income tax and I propose to increase the rebate limit to Rs 7 lakh in the new tax regime,” the Finance Minister said.

While a five percent tax will be levied on total income between Rs 3 lakh and Rs 6 lakh, 10 per cent will be levied on Rs 6 lakh to Rs 9 lakh, 15 per cent on Rs 9 lakh to Rs 12 lakh, 20 per cent on Rs 12 lakh to Rs 15 lakh and 30 per cent on Rs 15 lakh and above, she said.

0-3 lakh : Nil

3-6 Lakh : 5%

6- 9 Lakh : 10%

9-12 Lakh:15%

12-15 lakh:20%

above 15 lakh: 30%

An Individual with an annual income of 9 lakhs will be required to pay only 45,000 as income tax which is only 5 percent of his or her income. Similarly, an individual with an income of 15 lakh rupees will be required to pay only 1.5 lakh rupees or 10 percent of his or her income.

The government has extended the benefit of the standard deduction for the salaried class and the pensioners including family pensioners under the new tax regime. Each salaried person with an income of 15.5 lakh rupees or more will thus stand to benefit by Rs 52,000.

The Finance Minister has reduced the highest surcharge on personal income tax from 37 percent to 25 percent in the new tax regime.  This will result in a reduction of the maximum tax rate to 39 percent.
 
The government has increased tax exemption limit on leave encashment on the retirement of non-government salaried employees from existing 3 lakh rupees to 25 lakh rupees.

The Govt proposes to make the new tax structure as default tax option.

Proposal to extend Rs 50,000 standard deduction to salary earners under new tax regime.

Proposes to enhance grievance redressal mechanism for direct taxpayers.

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