5 income tax rule changes announced in budget 2023

“Increased exemption under section 87A of new income regime 7 lakh,” said the Finance Minister while presenting the Budget 2023.

“The new tax regime has got a big boost from the budget announcements made by the Finance Minister. Taxpayers at both ends of the spectrum will be incentivized under the new regime, as on the one hand there will be no liability up to an annual income of 7 lakhs and on the other the surcharge on higher incomes above 5 crores has been reduced from 37% to 25% Is. end,” said Alok Agarwal, Partner, Deloitte India.

Here are 5 income tax rules announced by FM Sitharaman in Budget 2023

1) Tax exemption limit raised to Rs 7 lakh 5 lakh

“Refund has been extended 7 lakh under the new tax scheme. The new information technology system will act as the default tax regime. Taxpayers will still be able to choose from prior arrangements. Salaried and pensioners: The standard deduction under the new system is Rs 52,500 for taxable income above Rs 15.5 lakh. The new system will reduce six income categories to five: basic exemption up to three lakh, 3-6 lakh 5%, 6-9 lakh 10%, and 9-12 lakh 15%. 12-15 lakh is 20%, while 15 lakh or more is 30%, said Amit Gupta, MD, SAG Infotech.

2) change in income tax slab

0-3 Lakh – Nil

3-6 lakhs – 5%

6-9 lakhs- 10%

9-12 Lakh – 15%

12-15 lakhs – 20%

Above 15 Lakh – 30%

3) The new income tax regime will be the default regime.

“The government is actively promoting the new tax regime, which will now be the default tax regime. The basic exemption under this regime has been increased from 2.5 lakhs to 3 lakhs. individual taxpayers earning up to Taxes will not have to be paid as compared to the current limit of 7 lakhs 5 lakhs. Tax rates have been reduced under the new tax regime and the maximum marginal rate has come down from 42.74% to 39%,” said Saraswathi Kasturirangan, Partner, Deloitte India.

4) A person with an annual income of 9 lakhs will have to pay only 45,000.

5) Maximum tax will be 39% including surcharge. The current tax rate in the country is 42.74%, one of the highest in the world. Budget23 proposes to reduce the highest surcharge rate in the new tax regime from 37% to 25%. As a result, the maximum tax rate will be reduced to 39%.

The Finance Minister also announced that the average processing time for income tax returns has been reduced from 93 days to 16 days.

Income tax slabs were not changed since 2014. The basic personal tax exemption limit was last revised in 2014.