In Budget 2023, Finance Minister proposed changes for financial year 2023-2024
1. Income Tax Rebate limit change for New Tax Regime
Finance Minister announced an increase in the Income Tax Rebate limit from Rs.5 lakh to Rs.7 lakh under the new tax regime. Currently those with an income of Rs.5 lakh do not pay any income tax, now effective financial year 2023-24 onwards those with an income of Rs.7 lakh will not require to pay any income tax who had opted for new tax regime, but those who had opted for old tax regime their limit will remain 5 lakh.
2. Change in Income Tax Slab Rates for New Tax Regime
The Income tax slab for New Tax Regime is now changed effective new financial year 2023-24
Taxable Income Slab(Rs.)
New Tax Rates
Upto 3 lakhs
3 Lakh to 6 Lakh
6 Lakh to 9 Lakh
9 Lakh to 12 Lakh
12 Lakh to 15 Lakh
15 Lakh above
3. New Tax Regime to be default tax regime
Earlier employee at the beginning of every financial year used to opt for New Tax Regime if he wants, but effective new financial year 2023-24 the default tax regime will be New Tax Regime instead of Old Tax Regime. So from April 2023 onwards if employee want to go with Old Tax Regime, then he should exercise this option himself by submitting declaration or via ESS payroll application provided by employer, or else his tax will get calculate based on New Tax Regim
4. Highest surcharge reduce for new tax regime
The highest surcharge limit which was 37% is now reduce to 25%, and this option is available only to those employee who choose New Tax Regime.
5. Leave exemption limit increased
The leave exemption limit is now increased from Rs.3 lakh to Rs.25 lakh.
6. Standard Deduction limit extended to new tax regime
Earlier the standard deduction limit of Rs.50,000/- was available for those who opted Old Tax Regime. Now it’s proposed to extend this benefit to new tax regime.