Will the middle income group benefit from the new tax slabs in FY 2023-24?

Commenting on the personal income tax guidelines framed under Budget 2023, Dr. Suresh Surana, Founder, RSM India said, “The new tax regime for individuals and HUFs has now been proposed as the default tax regime. The exemption limit for personal tax has been raised to Rs. 7 lakh under the new tax regime and thus, individuals earning up to Rs. 7 lakh will not have to pay any tax in the new tax system. Under the new regime the slab rates have been increased from Rs. 2.50 lakh to Rs. 3 lakh and the slab has been reduced from 7 to 6. Also, under the new regime, the highest surcharge will be 25% for income above Rs. 2 crores, thereby reducing the maximum rate from around 42.7% to 39%. There is no change in the surcharge for those who choose to be governed under the old regime.”

New regime with new slabs and tax rates

Fintoo founder CA Manish P. Hinger said the new tax regime would be a “default tax regime”. In the new regime, zero tax is payable only up to Rs 7 lakh (earlier it was Rs 5 lakh).

“Exemption u/s 87A has been revised from Rs. 12,500 to Rs. 25,000. This makes nil tax up to Rs. 7 lakh income. Standard deduction of Rs. 50,000 to salaried individuals, deduction from family pension. 15,000 /-, currently allowed only under the old regime. These two deductions are now allowed in the new tax regime as well,” said CA Manish P. Hinger.

The new surcharge rates (in the new tax regime only) are as follows:

10% if income is above 50 lakhs and up to 1 crore

15% if income is above 1 crore and up to 2 crore,

25% if income is above 2 crores and up to 5 crores,

25% (earlier it was 37%) if the income is above 5 crores.

CA Manish P. Hinger said that this would reduce the maximum rate from around 42.7 per cent to around 39 per cent.

“Also, under the new regime, standard deduction would be available to the salaried class people, which is not available at present. From family pension Rs. 15,000 will also be available under the new regime. Any individual, HUF, AOP (other than cooperative), BOI or AJP not willing to be taxed under this new regime can opt to be taxed under the old regime. A person having income under the head “Profits and gains of business or profession” and opting for the existing regime can cancel that option only once and will continue to be taxed under the new regime thereafter. For those who do not have income under the head “Profits and gains of business or profession”, the option of the old regime can be exercised every year, said Dr. Suresh Surana.

Sonam Srivastava, Founder of Right Research, SEBI Registered Investment Advisor said, “In a typical announcement for the pre-election budget – in the new tax regime, they increased the tax exemption from 5 lakh per annum to 7 lakh per annum. Taxation rates have been reformed with 0 tax up to lakhs and the overall personal tax has been reformed in the new regime. In the new regime, savings-based exemptions are not applicable; hence, the middle-class taxpayer availing tax exemptions on insurance and savings Not very enthusiastic. The Finance Minister also reduced the rate of tax surcharge from 37% to 25%. He estimated an outlay of Rs 35000 crores on account of this. The massive benefit for middle class income tax payers is debatable as the new regime The benefits of 80C are less in the US. Big taxpayers will see the benefits of this move, but the wider middle class will not see much of it.”