Finance Minister Nirmala Sitharaman while presenting the Union Budget on Wednesday, 1 February, announced new income tax slabs.
"I introduced in 2020, the new personal income tax regime with 6 income slabs, starting from Rs 2.5 lakh. I propose to change the tax structure in this regime by reducing the number of slabs to 5 and increasing the tax exemption limit to Rs 3 lakh."Finance Minister Nirmala Sitharaman
The income tax slabs had not been changed since 2014.
The new tax rates are :
0 to Rs 3 lakh - nil
Rs 3 to 6 lakh - 5 percent
Rs 6 to 9 lakh - 10 percent
Rs 9 to 12 lakh - 15 percent
Rs 12 to 15 lakh - 20 percent
Above Rs 15 lakh - 30 percent
(An interactive comparing the old and new tax regimes from last year, and the new tax rates and slabs from the Budget 2023-24 announcement by FM Sitharaman will load below. Please wait for a couple of seconds if it hasn't loaded yet on your screen.)
The new tax regime is the default regime, the FM said.
Increase in Income Tax Rebate
Finance Minister Sitharaman also announced an increase in the Income Tax Rebate limit from Rs 5 lakh to Rs 7 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 presenting the Budget.
The government also proposed to reduce highest surcharge rate from 37 percent to 25 percent in new tax regime.
Sitharaman, in her budget speech, announced an increase in the standard deduction from Rs 50,000 to Rs 52,000 a year. "Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500," she said.
Salaried employees have to pay taxes on their income as they have very little option to avail exemption under head salary.
One of the major exemption that they claim is standard deduction but since past four years, the deduction amount remained the same.