Budget 2023 | There is no need to pay income tax for those earning up to Rs 7 lakh per annum.

look | Union Budget 2023: Key Updates on Personal Income Tax

Finance Minister Nirmala Sitharaman on Wednesday announced that those earning up to Rs 7 lakh annually need not pay any income tax under the new tax regime, in a push to a regime that rejects all exemptions on investments. does.

Stating that the new regime will become a default, the minister said taxpayers can, however, choose to file under the old regime, which allowed tax exemptions and deductions on investments and expenses such as HRA (House Rent Allowance) . No changes have been made in the budget for those who have opted to remain with the old system.

Those switching to the new tax regime can still avail the standard deduction of ₹50,000.

Those earning up to Rs 7 lakh a year and opting for the new tax regime can save Rs 33,800. Those earning up to Rs 10 lakh will save Rs 23,400 and those earning up to Rs 15 lakh will save Rs 49,400.

Ms Sitharaman reduced the surcharge from 37% to 25% for individuals with income above ₹2 crore.

This would translate into a savings of around Rs 20 lakh for people with a salary income of around Rs 5.5 crore.

In her Budget speech, Ms Sitharaman said that at present individuals with total income up to Rs 5 lakh do not pay any tax due to exemptions.

“Under the new regime, it is proposed to increase the exemption for resident individuals so that they do not pay tax if their total income is up to ₹7 lakh,” explained Ms. Sitharaman.

The minister said that the number of slabs would be reduced to five.

The new slabs will come into effect from April 1.

Here is a list of announcements related to income tax announced in the budget.

1. There were six income slabs starting from ₹2.5 lakh. Now, the tax slabs have been reduced and the limit has been raised to ₹3 lakh.

2. No tax on income up to ₹3 lakh; 5% tax on ₹3-6 lakh; Under the new IT regime, 10% tax on ₹6-9 lakh, 15% tax on ₹9-12 lakh, 20% tax on ₹12-15 lakh and 30% tax on income above ₹15 lakh.

3. ₹3 lakh limit for tax exemption on leave encashment for government salaried employees. It was fixed in 2002 when the government salary was low and now it is being increased to Rs 25 lakh.

4. The government has proposed to increase the income tax exemption limit from ₹5 lakh to ₹7 lakh in the new tax regime.

5. A person earning Rs 9 lakh annually will now have to pay only Rs 45,000 instead of Rs 60,000 at present. A person earning Rs 15 lakh will have to pay Rs 1.5 lakh, down from Rs 1.87 lakh under the new tax structure.

6. The highest tax rate in our country is 42.74%, it is the highest in the world. In the new tax regime, the highest surcharge rate will be reduced from 37% to 25%. As a result, the maximum tax rate will be reduced to 39%.

7. Proposed to extend standard deduction of ₹50,000 to salaried individuals under the new tax regime.

8. The new income tax regime will now become the default option, but people will still have the option of opting for the earlier regime.