As a result of the budget announcements made by Union Finance Minister Nirmala Sitharaman, the New Tax Regime, which was made more appealing in the February budget, is now up to salaried individuals to choose between the Old Tax Regime (with exemptions and deductions) and the New Tax Regime, which takes effect in the new fiscal year beginning April 1.
Other advantages of the new tax system include the standard deduction and no taxation on taxable income up to Rs. 7 lakh, a reduction in the taxable income surcharge of Rs. 5 crore and beyond
What changes have been made as a result of the new tax system?
The new expense framework is something that the public authority believes an ever increasing number of individuals should pick. To make it seriously engaging, they have hence incorporated a couple rewards under this. The following changes have been made public as a result of the new tax system:
- New income tax slabs: The new income tax slabs offer six tax brackets, with income up to Rs. 1 exempt from taxation. 3 lakh and an expense rate expanding by 5 rate focuses for each extra Rs. 3 lakh in earnings.
- Changes to the income tax slabs: Under the new tax system have resulted in an increase in the basic exemption amount. This means that the level of the basic exemption has increased. The new tax system has increased the basic exemption amount by 50,000 rupees, from Rs 2.5 lakh to Rs 3 lakh.
- Standard deduction under the new tax system: With the new tax system, salaried people and retirees (including family pensioners) can now take advantage of the standard deduction. A standard deduction of Rs 50,000 is available to anyone who opts for the new tax system for the fiscal years 2023–24. If they choose the new tax system, pensioners who have dependents can take a standard deduction of Rs. 15,000.
- Up to Rs. 7 lakh in income is tax-free: In the event that the available pay for an individual picking the new duty system for FY 2023-24 doesn’t arrive at Rs 7 lakh in a monetary year, they won’t be dependent upon tax collection. Likewise, an individual with available pay up to Rs 7.5 lakh can profit from the Rs 50,000 standard derivation. As a result, they will not have to pay any taxes because their taxable income will be reduced to Rs 7 lakh.
Note: Unless… the government has made the new tax system the default, it is chosen by default. This means that unless you specifically choose the old tax system, your employer will deduct taxes from your wages based on the income tax bracket that applies to your income under the new system.
