Union Budget 2023-24: All Deets About the New Income Tax Regime

The Union Budget 2023–24 included a rise in the income tax rebate limit, according to Finance Minister Nirmala Sitharaman. Taxpayers will no longer be compelled to pay anything if their annual income is up to ₹7 lakh. Before, under both the old and current tax systems, anyone making up to ₹5 lakh yearly was not required to pay income tax. The maximum rebate has now been raised to ₹7 lakh and only those who choose the new tax system.

The new income tax system’s tax slabs have also changed as a result of Union Budget 2023-24. The Finance Minister decreased the number of tax slabs from seven to five while increasing the tax exemption cap by ₹50,000 to ₹ 3 lakh.

Union Budget: Various Tax Slabs

Income of between 0 and 3 lakh rupees would no longer be taxed under the new tax system. Previously, there was no tax on earnings of up to ₹2.5 lakh. The rate of tax for revenue between ₹3 lakh and ₹6 lakh is 5%, between ₹9 lakh and ₹12 lakh is 15%, and from ₹12 lakh to ₹15 lakh is 20%. 30% taxation on income over ₹15 lakh is not applicable.

The tax brackets and tax slabs for the previous tax system have not been altered. The Finance Minister further declared that the new tax system is now the standard tax system and that the previous tax system will only be made accessible upon demand.

For individuals who have a revenue of ₹5 lakh or less, the tax credit was capped at ₹12,500 under Section 87A of the Income Tax Act. A taxpayer’s actual net tax burden was previously zero under the previous tax system after claiming all Chapter VIA deductions for income up to ₹5 lakh.

Consequently, if a taxpayer, including a yearly salary of ₹7 lakh chooses the new tax system, he will be eligible for a ₹25,000 rebate. Therefore, these taxpayers won’t be required to pay this taxas per the Union Budget 2023-24.