New Updates on Income Tax Slabs for FY 2023-2024
On 1st February 2023, our Finance Minister, Nirmala Sitharaman announced the new tax regime in Budget 2023. Income tax Announced some changes in the slab. The changes sparked a wave of curiosity among taxpayers. So we are here to clear all the misconceptions regarding this update with details and facts. Below are the changes announced on 1st February 2023:
1) For salaried individuals and pensioners, a standard deduction has been introduced under the new tax regime.
2) Under this new regime, the basic exemption limit has been increased from Rs 2.5 lakh to Rs 3 lakh.
3) The highest surcharge rate which was 37% has been reduced to 25%.
4) The income exempt under section 87A has been increased to Rs 7 lakh from Rs 5 lakh earlier. So now for FY 2023 to 2024, those having taxable income up to Rs 7 lakh and opting for the new tax regime will have to pay 0 taxes.
These new regimes will be the default option for taxpayers and you can choose to opt for the old tax regime as well.
Revised tax slabs under the new tax regime
We have to bear in mind that cess at the rate of 4%Income taxshall be added to the amount, and a surcharge shall be applicable on the taxable income which exceeds Rs.50 lakhs.
The above changes will be applicable from 1st April 2023 for FY 2023-2024, for which you will be required to submit investment declarations for the purpose of computing taxes on salary to your employer for FY 2023-2024. If you do not want to opt for the new tax regime, you must specify otherwise, your employer will assume that you have opted for the new tax regime. However, you can continue to opt for the old tax regime or go with the new regime for FY 2022-2023 (up to March 2023) or Assessment Year 2023 to 2024, depending on your choice.
Hence the main highlight of the budget announcements was the increase in the taxable income limit from Rs 5 lakh to Rs 7 lakh to avail exemption under Income Tax Slab Section 87A in India for the financial year 2023-24. To understand it in simple words, the amended income tax regime says that a person with taxable income up to Rs 7 lakh will now have to pay zero tax. And the other major attraction is the revision in tax slabs for those opting for the new regime. Our finance minister clearly said that this is a default option for every individual and one must definitely opt for the old tax regime. Those who are opting for the old tax regime will continue to get deductions under section 80C, and 80D deduction, HRA, etc. without any change in tax rates. Although the new tax regime offers you lower tax rates, it is divided into slabs as compared to the old tax regime.
