Finance Minister, Mrs. Nirmala Sitharaman introduced a New Tax Regime (NTR) in 2020, and gave taxpayers the option to choose between the traditional tax system and the new one introduced.
What is NTR?
In the NTR, there are lower income tax rates and additional slabs however there is no option of availing tax exemptions and deductions (like house loan or HRA) are made available for taxpayers that exist with the old income tax regime.
Slab Rates under NTR
Slab rate for New Tax Regime – Applicable for All Individuals & HUF irrespective of age and gender (i.e. applicable to men, women, senior citizens, super senior citizens)
|New Regime Slab Rates till FY 2022-23||New Regime Slab Rates for FY 23-24 as per Budget 2023|
|Up to Rs 2.5 lakh – Nil||Up to Rs. 3 lakh – Nil|
|Rs 2.5 lakhs- Rs 3.00 Lakhs – 5% (rebate u/s 87a available)||Rs. 3 lakh to Rs. 6 lakh – 5% (rebate u/s 87a available)|
|Rs 3.00 lakhs – Rs 5.00 Lakhs – 5% (rebate u/s 87a available)||Rs. 6 lakh to Rs. 9 lakh – 10% (rebate u/s 87a available upto 7 lakh)|
|Rs 5.00 lakhs- Rs 7.5 Lakhs – 10%||Rs. 9 lakh to Rs. 12 lakh – 15%|
|Rs 7.5 lakhs – Rs 10.00 Lakhs – 15%||Rs. 12 lakh to Rs. 15 lakh – 20%|
|Rs 10.00 lakhs – Rs. 12.50 Lakhs – 20%||Rs 15 Lakhs & above- 30%|
|Rs 12.5 lakhs- Rs. 15.00 Lakhs – 25%||–|
|Rs 15 Lakhs & above- 30%||–|
List of common Exemptions and deductions “ not allowed” under NTR
The taxpayer can opt for concessional rates under NTR but will have to forgo certain exemptions and deductions that are available to taxpayers in the existing old tax regime. 70 deductions & exemptions that are not allowed, out of which the most important are listed below:
List of deductions “allowed” under new Tax rate regime
There are some deductions that are available to the taxpayer under NTR. The following is the list of the deductions available:
Proposed changes in NTR under Budget 2023
1. New tax slabs introduced for Financial year 2023-24 (stated above)
2. Extension of the benefit of standard deduction of 50,000 to salaried individuals and 2,500 professional tax, and deduction from family pension up to 15,000. Each salaried person with an income of 15.5 lakh or more will thus stand to benefit by Rs. 52,500.
3. Increase in the rebate limit to 7 lakh (stated above) Thus, persons in the new tax regime, with income up to 7 lakh will not have to pay any tax.