What Budget 2023 income tax changes?

[ad_1]

Budget 2023 income tax: Sitharaman announced that the new income tax regime will now be the default tax regime. But, citizens will continue to have the option to avail the benefit of the old tax regime.

Union Finance Minister Nirmala Sitharaman announced major changes in personal income tax on Wednesday, which will be a huge relief to middle- and salaried-class people. Presenting the Union Budget for FY 2023-24, Sitharaman said that the proposals regarding personal income tax will primarily benefit the country’s “hard-working middle class”. According to Sitharaman, the new income tax regime will now be the default tax regime. Citizens will be able to continue to benefit from the old tax regime.

The following are the major announcements:

The first proposal concerned the personal income tax rebate. Income of up to 5 lakhs rupees is exempt from income tax under both the old and new tax regimes. In the new tax regime, Sitharaman proposed raising the rebate limit to Rs 7 lakhs. “As a result, people in the new tax regime with income up to Rs 7 lakhs will not have to pay any tax,” she explained.

Sitharaman introduced a new personal tax regime in 2020, with six income tax slabs beginning at Rs 2.5 lakhs. She has now proposed reducing the number of tax brackets to five and raising the tax exemption limit to 3 lakhs.

The proposal was for the salaried class and the pensioners including family pensioners. She proposed extending the standard deduction benefit to the new tax regime. “Each salaried person with an income of ₹15.5 lakhs or more will thus stand to benefit by ₹52,500,” the minister said.

Her proposal for personal income tax was regarding the highest tax rate, which currently stands at 42.74 percent. Sitharaman proposed to reduce the highest surcharge rate from 37% to 25% in the new tax regime. She said the proposed change would result in the reduction of the maximum tax rate to 39 percent.

The last major announcement involved the limit on tax exemption on leave encashment on the retirement of non-government salaried employees. The limit of ₹3 lakhs was last fixed in 2002 during the Atal Bihari Vajpayee government when the highest basic pay in the government was ₹30,000 per month. In line with the increase in government salaries, Sitharman proposed to increase this limit to ₹25 lakhs.

 


Posted

in

by

Tags:

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *