The Union Budget 2023-24 brought significant changes to the personal income tax. These changes have come into effect from April 1, 2023, when the new financial year begins. The government has revised the income tax slabs and made the new income tax regime the default system for all taxpayers.
Below we have listed all the changes you must be aware of.
What Are The New Changes In Income Tax Slabs?
The number of income tax slabs in the new income tax regime has been reduced from five to six. The exemption limit has also been raised from Rs 2.5 lakh to Rs 3 lakh under the new regime. This means that taxpayers with an annual income of up to Rs 3 lakh don’t need to pay any income tax now. The tax rates are 0% for income up to Rs 3 lakh, 5% for income between Rs 3 and Rs 6 lakh, 10% for income between Rs 6 and Rs 9 lakh and so on.
Under the old tax regime, the no-tax slab was from Rs 0 to Rs 2.5 lakh. Various deductions could be claimed in the old tax regime under Section 80C, 80D, and 80CCD among other sections of the Income Tax Act to bring down the taxable income. No deductions, however, are available in the new tax regime.
New And Old Tax Regime
The rebate limit has been increased from Rs 5 lakh to Rs 7 lakh under the new tax regime. The rebate is available under Section 87A of the Income Tax Act. Now those who choose the new tax regime will not be liable to pay any tax for annual income of up to Rs 7 lakh.
Under the new tax regime, the total payable tax will turn out to be Rs 54,600 for a person with annual income of Rs 10 lakh. For an annual income of Rs 15 lakh, the tax liability will be 1,45,600.
The new tax regime is the default system to calculate income tax from April 1. But taxpayers will still be allowed to choose the old tax regime.
The highest surcharge will be brought down to 25% from 37% in the new tax regime. Hence, April 1 onwards the maximum tax rate is 39%. Till March 31, 2023, the maximum tax rate was 42.74%.
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