After the announcements made by Finance Minister Nirmala Sitharaman in Union Budget 2023, many taxpayers are preparing to take advantage of the new tax slabs and deductions under New tax regime including the tax exemption up to taxable income of Rs. 700000 to save taxes in the current financial year, 2022-23 (ended on March 31, 2023).
However, this is not correct. Tax Exemption of Rs. 7,00,000 under New Tax Regime is not applicable for Financial year 2022-23.
The new deductions and exemptions were announced in the Budget however, the budget is also required to be passed in both the houses of Parliament. Once the Budget is passed in Parliament, it will come into effect from the Financial Year 2023-24. Thus, the benefits announced in the Budget cannot be availed for Financial Year 2022-23 (ended on March 31, 2023).
The Lok Sabha on March 23rd passed the 2023-24 Union budget. On March 27th, the Rajya Sabha gave its approval to the Finance Bill, 2023, presented by the Union Finance Minister Nirmala Sitharaman.
The benefits can be availed for the investments made and income earned in the upcoming Financial Year (i.e beginning from 1st April 2023) and can be claimed in filing tax return in Year 2024. Any income earned between April 1, 2023, and March 31, 2024, will either be taxed at the new income tax slabs under the new tax regime or the old tax regime (depending on the tax regime opted by the taxpayer).
Taxes for Financial Year 2022-23 (ended on March 31, 2023)
The income slabs announced in the previous budget, i.e Budget 2022 shall be applicable for the income earned between April 1, 2022, and March 31, 2023. There were no changes made under Budget 2022 in the income tax slabs. Thus, the taxpayers shall calculate tax as per the applicable income tax slabs.
The following are the Tax slabs applicable as per Old and New Regime for Financial year 2022-23 (ended on March 31, 2023).
Tax Slabs for Financial Year 2022-23 (ended on March 31, 2023)
Old Tax Regime
|Old Regime Slab Rates for FY 2022-23||Rate|
|Up to Rs 2.5 lakh||Nil|
|Rs 2.5 lakhs- Rs 5.00 Lakhs||5% (rebate under section 87A available)|
|Rs 5.00 lakhs- Rs 10.00 Lakhs||20%|
|Rs 10.00 lakhs & above||30%|
New Tax Regime
|New Regime Slab Rates till FY 2022-23||Rate|
|Up to Rs 2.5 lakh||Nil|
|Rs 2.5 lakhs- Rs 5.00 Lakhs||5%|
|Rs 5.00 lakhs- Rs 7.5 Lakhs||10%|
|Rs 7.5 lakhs – Rs 10.00 Lakhs||15%|
|Rs 10.00 lakhs – Rs. 12.50 Lakhs||20%|
|Rs 12.5 lakhs- Rs. 15.00 Lakhs||25%|
|Rs 15 Lakhs & above||30%|