Budget 2023: 'Bale Bale' for the Middle Class ! Income Tax slabs tweaked , Rs 7 lakh exemption proposed

Middle class and salaried professionals which forms the majority of India’s Tax payer base in the country, excitedly followed the Union Budget 2023 presented by Union Finance Minister Nirmala Sitharaman. They had huge expectations in terms of income tax slabs or rates and were not disappointed by the announcements made in the Budget 2023.

No Taxes will be paid by those earning upto Rs 7 lakh per annum

Nirmala Sitharaman announced that No tax payment will be done by those who are earning upto Rs 7 lakh per annum. Further stated that New Tax Regime will be the default regime. However, taxpayers can opt for the old tax regime.

While presenting the Union Budget 2023, she stated,

"I introduced the new personal income tax regime in 2020 with 6 income slabs, starting from ₹2.5 lakhs. 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 ₹3 lakhs,"

Also Read: Union Budget 2023: Will FM Sitharaman be able to balance the economic expectations and political aspirations?

New Tax regime is now default tax regime (Old Tax regime will continue)

Highlights

• Tax rebate limit extended to 7 lacs (new regime)
• An individual making Rs. 9 lakh per year will only have to pay Rs. 45,000.
• Under the new tax system, there is no tax on income up to Rs 3 lakh, a 5 percent tax on income between Rs 3 lakh and Rs 6 lakh, and a 30 percent tax on income over Rs 15 lakh.
• According to the new tax regime, a person making Rs 15 lakh will now only have to pay Rs 1.5 lakh in taxes instead of Rs 1.87 lakh.
• Government will increase the cap on cash deposits and loans made by Primary Agricultural Credit Societies to Rs 2 lakh per member.
• In new tax Regime, the government wants to lower the highest surcharge rate from 37 percent to 25 percent
• Leave encashment exemption (pvt) increased from 3Lacs to 25 Lacs

Change in tax slabs & new tax rates

0-3 L : Nil

3-6 L : 5%

6L-9L : 10%

9L-12L: 15%

12-15 L : 20%

15L +: 30%

Since 2014, there has not been a modification to the income tax slabs. The standard personal tax exemption threshold last underwent an update in 2014. During the presentation of the 2020 budget, FM Sitharaman unveiled a new income tax system. The new tax system is still a choice for taxpayers, though.

Also Read: Economic Survey 2023: Govt. committed to meet Capital Expenditure target of Rs 7.5 lakh cr for FY23

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