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Revised Income Tax Slabs – How Take-Home Salary of Employees Will be Impacted in New Income Tax Rule Change
FM Sitharaman said currently individuals with total income of up to Rs 5 lakh do not pay any tax due to rebate under both the old and new regimes.
Budget 2023 Latest News Today: Union Finance Minister Nirmala Sitharaman on Wednesday presented Union Budget 2023 and announced the new personal income tax rates for the salaried class. She said in the new tax system, the income tax rebate is increased to income up to Rs 7 lakhs.
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During the Budget presentation, FM Sitharaman unveiled a new income tax system and said the new tax system is still a choice for taxpayers, though. The standard personal tax exemption threshold last underwent an update in 2014.
New Income Tax Rates
- 0 to Rs 3 lakhs – nil
- Rs 3 to 6 lakhs – 5%
- Rs 6 to 9 Lakhs – 10%
- Rs 9 to 12 Lakhs – 15%
- Rs 12 to 15 Lakhs – 20%
- Above Rs 15 Lakhs – 30%
According to FM Sitharaman, the average processing period for income tax returns has been lowered from 93 days to 16 days and she said the Centre plans to roll out next-gen unified IT Return forms and increase grievance redressal.
In the present Budget 2023, FM Sitharaman said currently individuals with total income of up to Rs 5 lakh do not pay any tax due to rebate under both the old and new regimes.
“It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to Rs 7 lakh,” Sitharaman said.
The FM further added that under the new personal income tax regime, the number of slabs would be reduced to five.
“I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs 3 lakh,” Sitharaman said.
As part of the concessional tax regime, tax will not be imposed for income up to Rs 3 lakh and the income between Rs 3-6 lakh would be taxed at 5 per cent; Rs 6-9 lakh at 10 per cent, Rs 9-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent.
Right now, a 5 per cent tax is imposed on total income between Rs 2.5 lakh and Rs 5 lakh, 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs 10 lakh to Rs 12.5 lakh, 25 per cent on Rs 12.5 lakh to Rs 15 lakh, and 30 per cent on above Rs 15 lakh. Notably, from April 1, these slabs will be modified as per the Budget announcement.
According to FM Sitharaman, the standard deduction would increase from the existing level of Rs 50,000 to Rs 52,500 annually. Along with the fundamental exemption limit, the standard deduction is a base amount that is not taxed, offering assistance to all tax payers.
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