The income tax slabs have been modified in Budget 2023 to accommodate the new income tax system for the fiscal years 2023–2024. New income tax brackets are announced by India’s finance minister each year. Now, there are two different ways to tax income. Under both the new and previous regimes, taxpayers can take advantage of tax breaks.
Nirmala Sitharaman, the Finance Minister, made the announcement regarding this year’s Union Budget on February 1, 2023. The current income tax bracket was modified in the most recent budget. However, before we can comprehend the new income tax system, we must first comprehend what a income tax slab is.
What exactly is a tax slab?
The method by which individual taxpayers are required to pay their income taxes is referred to as the income tax slab. Depending on their income, an individual may fall into different tax brackets.
Consequently, individuals with higher incomes will be required to pay more taxes. The slab system was put in place to keep the country’s tax system fair. The slabs frequently change whenever a budget announcement is made.
Budget 2023-2014: New income tax brackets:
Up to Rs.3 lakh – Nil
Above Rs.3 lakh – Rs.6 lakh – 5% of the total income
Above Rs.6 lakh – Rs.9 lakh – 10% of the total income
Above Rs.9 lakh – Rs.12 lakh – 15% of the total income
Above Rs.12 lakh – Rs.15 lakh – 20% of the total income
Above Rs.15 lakh – 30% of the total income
Which is better- Old tax vs New tax regime:
Due to the fact that it depends on your income and financial situation, there is no definitive answer to this question. Both the new and old income tax brackets have advantages and disadvantages.
The previous income tax system gradually instilled a culture of saving in people by requiring them to make investments in specialized tax-saving mechanisms. It encourages saving for upcoming events like marriage, education, property purchases, medical costs, etc., whereas the new tax system allows taxpayers to freely invest their money. Your investment behavior is not subject to any laws or regulations under the new program.
A person who only qualifies for a deduction of Rs. 1,50,000 under section 80C would benefit more from the new tax system, whereas a person with a mortgage loan and other deductions might have benefited more from the old system.
Taxpayers have the option of opting for either the old or new tax system that best meets their requirements. The government will not impose any fines if you do not switch to the new tax system.
