Budget 2023: Income Tax Slabs Revised; How It Works

Under the new income tax regime, no tax would be payable for income up to Rs 7 lakh per annum.

Budget 2023: Finance Minister Nirmala Sitharaman on Wednesday presented the most-awaited Union Budget for the fiscal 2024. One of th major highlight of the Union Budget 2023 was the new tax slabs announced for 2023-24. Under the new income tax regime, no tax would be payable for income up to Rs 7 lakh per annum.

Budget 2023: Understanding revised tax slabs

A tax of 5 per cent would be levied on total income between Rs 3 lakh and Rs 6 lakh, 10 per cent tax would be imposed on income between Rs 6 lakh to Rs 9 lakh, it would be 15 per cent on income between the range of Rs 9 lakh to Rs 12 lakh.

On the income range of Rs 12 lakh to Rs 15 lakh, 20 per cent tax would be levied, while tax would be 30 per cent on income slab of Rs 15 lakh and above, the finance minister informed.

Different tax rates have been provided for various categories of taxpayers and for different sources of income. Individuals/HUFs/AOP/BOI are taxed as per the different slab rates. However, companies are taxed at fixed rate, except for certain specified incomes.

Sitharaman also allowed a Rs 50,000 standard deduction to taxpayers under the new regime, where assessees cannot claim deductions or exemptions on their investments.

Meanwhile, Sitharaman said the average processing time for income tax returns has also been reduced from 93 days to 16 days. “The government intends to roll out next-gen common IT Return forms and strengthen grievance redressal,” said Sitharaman.

Reacting on the new income tax slabs announced by Sitharaman today, Sandeep Agrawal, Director & Co-founder Teamlease Regtech, told India.com that Union Budget 2023-24 has reduced the tax liabilities for middle class individuals with revisions to the number of tax slabs (reduced from 6 slabs to 5 slabs) and increase in the limits within each slab in the new tax regime.

“Now, an individual with an annual income up to Rs 3 Lakh will not have to pay any tax (as against an earlier limit of Rs 2.5 Lakhs). Further, it proposes a 5% tax for Income between Rs 3 – 6 Lakhs, 10% for income between 06 – 09 Lakhs, 15% for income between 09 – 12 Lakhs, 20% for income between 12 – 15 Lakhs and 30% above 15 Lakhs. This will result in around 25% reduction in tax liability for individuals with income up to Rs. 9 Lakhs and around 20% reduction in tax liability for individuals with income up to Rs. 15 Lakhs,” Sandeep Agrawal said.

BUDGET 2023: NEW INCOME TAX RATES 

• 0 to Rs 3 lakhs – nil
• Rs 3 lakhs to 6 lakhs – 5%
• Rs 6 lakhs to 9 Lakhs – 10%
• Rs 9 lakhs to 12 Lakhs – 15%
• Rs 12 lakhs to 15 Lakhs – 20%
• Above Rs 15 Lakhs – 30%

EARLIER INCOME TAX RATES 

• 0 to Rs 3 lakh – Nil
• Rs 3 lakhs to Rs 6 lakhs – 10%
• Rs 6 lakhs to 9 Lakhs – 15%
• Rs 9 lakhs to 12 Lakhs – 20%
• Rs 12 lakhs to 15 Lakhs – 30%
• Above Rs 15 Lakhs – 30