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Budget 2023: Major Revamp in IT slabs for 2023-24

Finance minister Nirmala Sitharaman announced a number of changes in the income tax slabs in the new tax regime.

Budget 2023: Finance minister Nirmala Sitharaman announced a number of changes in the income tax slabs ( IT )  in the new tax regime.  The New income tax regime has seen a major revamp in the income tax slab rates for 2023-24. The basic exemption limit under the new income tax regime has been hiked to Rs 3 lakh.

The income tax rebate limit available for salaried and individual taxpayers under the new income tax regime has been hiked to Rs 7 lakh from the present Rs 5 lakh. See the table below to know the income tax slabs 2023 for the new income tax regime.

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Here are the five major announcements:

The first proposal was related to the rebate on personal income tax. Those with income up to ₹5 lakh do not pay any income tax under both old and new tax regimes. Sitharaman proposed to raise this rebate limit to ₹7 lakh in the new tax regime. “Thus, persons in the new tax regime, with income up to ₹7 lakh will not have to pay any tax,” she said.

In 2020, Sitharaman had introduced a new personal tax regime with six income tax slabs starting from ₹2.5 lakh. She has now proposed to reduce the number of slabs to five and increase the tax exemption limit to ₹3 lakh.

The third 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 lakh or more will thus stand to benefit by ₹52,500,” the minister said.

Her fourth proposal in personal income tax was regarding the highest tax rate, which currently stands at 42.74 per cent. 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 reduction of the maximum tax rate to 39 per cent.

The fifth and the last major announcement on personal income tax involved the limit on for tax exemption on leave encashment on retirement of non-government salaried employees. The limit of ₹3 lakh was last fixed in 2002 during the Atal Bihari Vajapayee 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 lakh.

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