One of the important rules in personal taxation was the designation of the New Income Tax Regime as the default tax structure.
The government introduced a set of fresh Income Tax rules in the Union Budget 2023. One of the important rules in personal taxation was the designation of the New Income Tax Regime as the default tax structure.
Read More: Tax Talk: NRIs must update status on PAN
During her Budget speech, Union Finance Minister Nirmala Sitharaman emphasized that the proposals under the new income tax regime aim to empower individuals by allowing them to retain more of their income. The approach shifts responsibility to taxpayers, empowering them to choose where to invest their money, rather than relying on government incentives or disincentives.
Revised Tax Slab: To make the new tax regime more attractive, adjustments were made to the income tax slabs within this framework.
Read More: Last day for filing FY 2022-23 tax returns ends today. How to file & what if you miss it
- No tax on income up to Rs 3 lakh
- 5% for income between Rs 3 lakh and Rs 6 lakh
- 10% for income from Rs 6 lakh to Rs 9 lakh
- 15% for income from Rs 9 lakh to Rs 12 lakh
- 20% for income from Rs 12 lakh to Rs 15 lakh
- 30% for income exceeding Rs 15 lakh
Tax exemption limit in the new tax regime: The tax exemption limit has been increased in the new tax regime. People adopting the new tax system will get tax exemption on income of up to Rs 3 lakh, which till now was available only up to Rs 2.5 lakh. That means tax exemption on additional Rs 50 thousand will be available from this year.
Read More: IT Returns 2024: New Income Tax rules introduced in 2023 that would affect you in 2024
New tax regime becomes default: The new tax regime has been made the default regime. That is, while filing an ITR, it will by default show the new tax regime. If you want to go with the old tax system, you will have to select it manually.
Increase in tax rebate: Under Section 87A of the Income Tax Act, the rebate limit has been increased from Rs 12,500 to Rs 25,000 in the new tax regime.
Standard deduction of Rs 50 thousand: Till last year, employees and pensioners paying income tax used to get tax deductions of Rs 50 thousand only under the old tax system. From this year, employees and pensioners who choose the new tax regime will also get a standard deduction of Rs 50 thousand.
