The Financial minister of India, Mrs. Nirmala Sitharaman, presented the Union Budget for the year 2023-24. There have been various updates and proposals to different sectors of the Indian economy. The major changes have also been made under Personal Income Tax under New Tax Regime.
The following are the major updates made under Personal Income Tax in New Tax Regime –
1. No income tax on income up to 7 lakh: The Rebate limit of Personal Income Tax has been increased to Rs. 7 lakh from the current Rs. 5 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs. 7 lakh will not have to pay any tax.
2. Tax exemption limit of 2.5 lakh increased to 3 lakh: The New Tax regime was introduced with six income slabs in 2020. This has been reduced to five income slabs increasing the tax exemption limit to Rs. 3 lakh. New Tax Slabs under New Tax Regime: -Up to Rs 3 lakh: NIL, 3 lakh- Rs 6 lakh: 5%, 6 lakh-Rs 9 lakh: 10%, 9 lakh-Rs 12 lakh: 15%, 12 lakh- Rs 15 lakh: 20% and 15 lakh: 30%.
3. Surcharge rate reduced from 37% to 25%: The highest surcharge rate of 37% has been proposed to be reduced to 25 per cent in the new tax regime for income above Rs. 2 crore. This further will result in reduction of the maximum personal income tax rate to 39 per cent from the present 42.74 per cent.
4. New Tax Regime is to be the default regime: The Budget proposed that the New Tax Regime shall be made the default scheme. However, it is further stated that the Old Tax regime can also be opted by the assessees as per their discretion.
5. Standard deduction of Rs 52,500 in New Tax Regime: The budget provides major relief to the salaried class and the pensioners including family pensioners by extending the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs. 15.5 lakh or more will thus stand to benefit by Rs. 52,500/-. At present, standard deduction of Rs. 50,000/- to salaried individuals and deduction from family pension up to Rs. 15,000/- is currently allowed only under the old regime
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