Budget 2023: Income tax slabs changed under new tax regime. Details here

Income Tax Rates and Slabs: Under the new tax regime, the highest tax rate of 30% will be levied on income above Rs 15 lakh

Finance Minister Nirmala Sitharaman announced the new income tax slabs under the new income tax regime in her Budget speech on Wednesday. The tax rebate has been raised from Rs 5 to 7 lakh under the new regime. Moreover, the new tax regime will be default unless the taxpayer choses to adopt the old regime. 

No tax will have to be paid for income up to Rs 3 lakh. For income between Rs 3 to Rs 6 lakh, a tax of 5 per cent will be applicable. The highest tax rate of 30 per cent will be levied on income above Rs 15 lakh, under new income tax regime.

Abhishek Soni, Co-Founder & CEO, Tax2win said, "The introduction of new slabs with fewer tax rates under the new tax regime as well as the announcement of introducing a single simplified common income tax return form in the future, clearly shows the government's objective to simplify the income tax for the common people. Further, no tax is levied up to 7 Lakh of income, a big relief for millions of salaried individuals."

The highest surcharge rate down has been slashed from 37 per cent to 25 per cent. The Centre also proposed to cap deductions from capital gains on investments in residential houses to Rs 10 crore. 

"I propose to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime," Sitharaman said.

According to Sitharaman, an individual with annual income of Rs 9 lakh will have to pay only Rs 45,000 in tax. And an individual with income of Rs 15 lakh will have to pay Rs 1.5 lakh tax down from Rs 1.87 lakh under new tax structure.

Alok Agrawal, Partner, Deloitte India, "The new tax regime has got a great boost by the Budget announcements made by the FM. Taxpayers at both ends of the spectrum will be encouraged under the new regime, as there will be no liability upto annual income of 7 lacs on one hand and surcharge on annual income above 5 crores has been reduced from 37 per cent to 25 per cent at the high income end."

On Tax Exemptions, Saraswathi Kasturirangan, Partner, Deloitte India said, "The government is actively promoting the new tax regime, which will now be the default tax regime. The basic exemption under this regime has increased to 3 lakhs from 2.5 lakhs. Individual tax payers earning up to Rs 7 lakhs will not have to pay taxes as compared to current limit of Rs 5 lakhs. Tax rates have been reduced under the new tax regime and the maximum marginal rate drops from 42.74 per cent to 39 per cent."

FM Sitharaman said that the net tax revenue foregone because of changes in direct and indirect taxes is Rs 35,000 crore.

Also, under the senior citizen savings scheme, the maximum investment limit has been increased from Rs 15 lakh to Rs 30 lakh.

The tax exemption limit on leave encashment for retired non-government salaried employees has been fixed at Rs 25 lakh.

Sandeep Agrawal, director and co-founder of Teamlease Regtech said, "Union Budget 2023-24 has reduced the tax liabilities for middle class individuals with revisions to the number of tax slabs (reduced from 6 slabs to 5 slabs) & increase in the limits within each slab in the new tax regime. Now, an individual with an annual income up to Rs 3 Lakh will not have to pay any tax (as against an earlier limit of Rs 2.5 lakh). Further, it proposes a 5 per cent tax for Income between 03 – 06 lakh, 10 per cent for income between 06 – 09 lakh, 15 per cent for income between 09 – 12 lakh, 20 per cent for income between 12 – 15 lakh and 30 per cent above Rs 15 lakh. This will result in around 25 per cent reduction in tax liability for individuals with income up to Rs 9 lakh and around 20 per cent reduction in tax liability for individuals with income up to Rs 15 lakh."