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New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

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 Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes

 

The income tax slabs under the new income tax regime will now be as follows:

Rs 0 to Rs 3 lakh - 0% tax rate

Rs 3 lakh to 6 lakh - 5%

Rs 6 lakh to 9 lakh - 10%

Rs 9 lakh to Rs 12 lakh - 15%

Rs 12 lakh to Rs 15 lakh - 20%

Above Rs 15 lakh - 30%

 

The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)

 

Income tax slabs under new tax regime

Income tax rates under new tax regime

O to Rs 3 lakh

0

Rs 3 lakh to Rs 6 lakh

5%

Rs 6 lakh to Rs 9 lakh

10%

Rs 9 lakh to Rs 12 lakh

15%

Rs 12 lakh to Rs 15 lakh

20%

Income above Rs 15 lakh

30%

 

 

Further, the new income tax regime becomes the default tax regime. However, the individuals will have an option to continue with the old income tax regime. The government has reduced the surcharge of the highest rate from 37% currently to 25% in new tax regime. Shailini Jain, Tax Partner, EY India, says, "In line with the expectations of making new tax regime more attractive for individuals, the Finance Minister has announced new income slabs bringing down the overall tax outgo for the middle-income-earner group in FY 2023-24."

 

What are the current income tax slabs?

The new tax regime was announced in Budget 2020 and became effective from financial year 2020-21 (April 1, 2020). Currently, a salaried individual gets the option to opt for the old tax regime and continue to avail common tax deductions and tax exemptions. Else, he/she can opt for the new concessional income tax regime, without any common tax deductions and tax exemptions. Under the new tax regime, the individual will forego 70 deductions and tax exemptions, which includes HRA tax exemption, LTA tax exemption, deduction up to Rs 1.5 lakh under Section 80C and so on. The new tax regime was announced for individuals who were unable to claim the benefits of the deductions and tax exemptions available. It also helps to ease the compliance burden for the salaried taxpayers. Currently, the new tax regime offers 6 tax slabs and lower tax rates as compared with the old income tax regime. Income tax slabs and rates for resident individuals below 60 years of age, NRI and HUFs

 

Income tax slabs and rates for FY 2022-23                                                                                        

Old tax regime (With deductions and exemptions)

Total income

New tax regime (without deductions and exemptions)

Nil

Up to Rs 2.5 lakh

NIL

5%

From Rs 2,50,001 to Rs 5 lakh

5%

20%

From Rs 5,00,001 to Rs 7.5 lakh

From Rs 7,50,001 to Rs 10 lakh

 

10%

 

 

15%

30%

From Rs 10,00,001 to Rs 12.5 lakh

From Rs 12,50,001 to Rs 15 lakh

From Rs 15,00,001 and above

 

20%

 

 

25%

 

30%

 

According to the income tax laws, a salaried person can opt for the new tax regime as per their convenience in every financial year. In case an individual has a business income, they cannot choose the tax regime as per their convenience every year. If they opt for the new tax regime, they can switch back to the old tax regime only once in their life. Individual having net taxable income up to Rs 5 lakh will not be required to pay any tax in both the regimes as rebate under Section 87A is available in both tax regimes. However, they will be required to file income tax return. Do keep in mind that under both the tax regimes the basic tax exemption limit is Rs 2.5 lakh for individuals below the age of 60 years during the financial year. However, for senior citizens (above 60 years but below 80 years) and super senior citizens (above 80 years of age) the basic tax exemption limit is Rs 3 lakh and Rs 5 lakh, respectively, in the old tax regime. In the new tax regime, the basic tax exemption limit is Rs 2.5 lakh irrespective of the age of the taxpayer.

 

What is the basic exemption limit under the new tax regime for FY 2023-24?

The basic income exemption limit will be Rs 3 lakh from April 1, 2023. This limit has been hiked in Budget 2023 from Rs 2.5 lakh earlier.

 

Can you claim any deductions under the new tax regime 2023?

Budget 2023 has allowed standard deduction of Rs 50,000 for salaried and pensioners. Apart from this, they can claim deduction under Section 80CCD (2) of the Income-tax Act, 1961.

 

What are the surcharge rates applicable in new tax regime for FY 2023-24?

The government has proposed to revise the surcharge rate under the new tax regime for FY 2023-24. The revised surcharge rate as follows: (A) Taxable income above Rs 50 lakh - 10% (B) Taxable income above Rs 1 crore - 15% (C) Taxable income above Rs 2 crore - 25%.

 

What is the tax rebate available under Section 87A under the new tax regime?

A tax rebate of Rs 25,000 is available under the new tax regime. This tax rebate is applicable for all individuals whose taxable income does not exceed Rs 7 lakh. This would make effective tax outgo zero.

 

Are there any changes announced in the old tax regime in Budget 2023?

There has been no change in the income tax slabs and rates under the old tax regime in Budget 2023.

 

-Economic Times 9th February 2023.

 

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