Huge Relief in Budget 2023! Tax rebate limit raised to INR 7 lakh under the new regime
By Sanjay Maurya
The Modi-led central government has announced a slew of changes to the ‘new income tax slab’ in order to reduce the tax liabilities for middle-class individuals. During the Budget 2023 presentation, Finance Minister Nirmala Sitharaman said that tax exemption has been increased on income up to INR 7 lakh as against INR 5 lakh in the new tax regime as per Section 87A. The Finance Minister said that the highest surcharge rate in the new slab has been reduced from 37 percent to 25 percent.
2023 Union budget of India
- Deficit: 6.4% (0.3%) (in 2022)
- Finance minister: Nirmala Sitharaman (presently)
- Parliament: 17th (Lok Sabha)
- Presented: 2023
- Total expenditures: ₹39.45 trillion (US$490 billion) (in 2022)
“Moving forwards, the new tax regime will be the default. However, citizens can continue to use the old one too,” added Sitharaman.
| Income tax slab (Proposed) | Tax Rate |
| Up to Rs 3 lakh | Nil |
| Rs 3 lakh-Rs 6 lakh | 5% |
| Rs 6 lakh- Rs 9 lakh | 10% |
| Rs 9 lakh- Rs 12 lakh | 15% |
| Rs 12 lakh- Rs 15 lakh | 20% |
| Above Rs 15 lakh | 30% |
In last year’s budget, Nirmala Sitharaman did not make any changes to the existing tax system.
Still confused? Here we decode the Income Tax Slab
Under the new tax regime, those whose income is between INR 3 lakh to INR 7 lakh are exempt from 5 percent or 10 percent tax. But those whose annual income is more than INR 7 lakh will not get the benefit of this rebate.
Suppose your annual income is INR 9 lakh, then you will not get the benefit of a rebate and you will have to pay a total income tax of INR 45,000. However, this is 25% less than the Rs 60,000 being paid under the old slab.
With effect from April 1, these slabs will be modified as per the Budget announcement.
Are there any benefits?
The new income tax regime allows a salaried taxpayer to take advantage of lower income tax rates and hence pay less income tax. Standard deduction has been included in the new income tax regime for the financial year 2023-24. However, general exemptions like sections 80C, 80D, 80TTA, and home loan benefits are not available.
