In the Union Budget 2023, Finance Minister Nirmala Sitharaman suggested making significant changes to the new tax structure in order to increase adoption. The fiscal year 2023–2024 will see the implementation of these modifications.
A new tax system was unveiled in India’s Union Budget 2020 that offers lower tax rates to those who are willing to give up certain exemptions and deductions. Taxpayers can choose to continue paying under the previous system until the fiscal year 2022–2023. However, on April 1, 2023, the new system will become the default.
Assuming that citizens are prepared to surrender exceptions and derivations like the House Lease Recompense (HRA), Leave Travel Concession (LTC), and others, they can exploit lower charge rates under the new expense framework.
For people with pay up to-
Rs. 3 lakhs: Rs., no tax 3 lakhs and Rs. 6 lakhs: 5% tax
Rs. 6 lakhs and Rs. 9 lakhs: 10% tax
Rs. Rs. 9 lakhs and 12 lakhs: 15% tax
Rs. Rs. 12 lakhs. 15 lakhs: 20% duty
Above Rs. 15 lakhs:
Tax of 30% It’s important to keep in mind that if a taxpayer chooses the new tax system, they won’t be able to use deductions like Section 80C and Section 80D.
Exemptions Under the New Tax System 2023–2024
The tax brackets have been rearranged, and everyone will use the new system by default starting with the next fiscal year. A lower tax rate was part of the new tax structure, but there were no exemptions. The tax-free amount has been raised to 7 lakh rupees.
Standard Deduction
A salaried taxpayer can claim up to Rs 50,000 in standard deduction. Family pensioners are entitled to a yearly standard deduction of Rs 15,000 under the new tax law.
Contributions to your NPS account made by your employer
As a salaried employee, you are entitled to deduct contributions to your NPS account made by your employer from your gross income. This deduction is requested in accordance with Section 80CCD (2) of the Income Tax Act of 1961. Under Section 80CCD(2), a maximum deduction of ten percent of the base salary plus DA is allowed.
Agniveer Corpus Fund
According to the announcement made in the Budget speech, the Agniveer may deduct from income any sum paid or deposited to the Agniveer Corpus Fund in accordance with the newly proposed section 80CCH of the Income-tax Act.
