New Delhi: On Wednesday, Finance Minister Nirmala Sitharaman made an announcement that the maximum income tax rebate would be raised. This was a significant relief for salaried workers as well as members of the middle class.
During her sixth consecutive Budget presentation in Parliament, the FM made a significant adjustment to tax slabs today (February 1), giving individual tax payers access to additional funds.
As of April 1, these slabs will change in accordance with the Budget’s release.
In the Union Budget 2023, FM Sitharaman made the following five significant announcements regarding personal income tax:
- It would not be taxed for taxpayers with annual incomes of up to Rs 7 lakh. In her budget presentation, the FM noted that individuals with annual incomes of up to Rs 5 lakh no longer have to pay taxes because of rebates under both the old and new tax systems. This rebate cap has been raised to Rs 7 lakh under the new tax system.
A move will save Rs 33,800 for individuals who choose the new tax system and receive a rebate of up to Rs 7 lakh on their income. The FM stated that savings of up to Rs. 10 lakh would amount to Rs. 23,400, and savings of up to Rs. 15 lakh would amount to Rs. 49,400.
- The number of tax slabs in the concessional tax system, which was first implemented in 2020–21, has been reduced from six to five.
- Income up to Rs 3 lakh would not be subject to tax under the revised concessional tax scheme. An income of Rs. 3-6 lakh would be taxed at a rate of 5%, or Rs. Rs. 6-9 lakh at a 10% tax rate 9-12 lakh, Rs. 15 percent tax rate 12-15 lakh at a rate of 20%, and Rs. 15 lakh and above to a tax rate of 30 percent.
- Under the new system, which forbids assessees from claiming exemptions or deductions on their investments, the FM also provided taxpayers with a standard deduction of Rs 50,000. According to FM, this would translate into a savings of approximately Rs 20 lakh for individuals whose salary income is approximately Rs 5.5 crore.
- Sitharaman also reduced the surcharge for individuals with high salaries from 37% to 25% for those with a net worth of more than Rs 2 crore.
