New Delhi: Finance Minister Nirmala Sitharaman on Wednesday proposed to increase the tax rebate to Rs 7 lakh, which means no tax will be levied on income up to Rs 7 lakh under New Regime.
The earlier rebate limit was Rs 5 lakh.
“The rebate under section 87A of the new income regime will be hiked to Rs 7 lakh. Moving forwards, the new tax regime will be a default one and citizens can continue to use the old regime too. The standard deduction under New Tax Regime for individuals with income up to Rs 15 lakh will be Rs 52,400,” she said.
Personal #IncomeTax for the hardworking middle class…
Currently, those with an income of Rs 5 lakhs do not pay any income tax and I propose to increase the rebate limit to Rs 7 lakhs in the new tax regime: FM @nsitharaman
#Budget2023 #AmritKaalBudget @IncomeTaxIndia pic.twitter.com/NiqIzlSfzY— PIB in Odisha (@PIBBhubaneswar) February 1, 2023
This will benefit salaried class and pensioners, including family pensioners.
Presenting her fifth straight budget in the Lok Sabha, the FM also proposed to reduce the number of income slabs from 6 to 5 and increase the tax exemption limit to Rs 3 lakh from Rs 2.5 lakh.
The new income tax slabs:
up to Rs 3 lakh: NIL
Rs 3 lakh- Rs 6 lakh: 5%
Rs 6 lakh-Rs 9 lakh: 10%
Rs 9 lakh-Rs 12 lakh: 15%
Rs 12 lakh- Rs 15 lakh: 20%
Over Rs 15 lakh: 30%
“This will provide major relief to all taxpayers in the new regime. An individual with an annual income of Rs 9 lakh will be required to pay only Rs 45,000. This is only 5 per cent of his or her income. It is a reduction of 25% on what he or she is required to pay now, ie, Rs 60,000. Similarly, an individual with an income of Rs 15 lakh would be required to pay only Rs 1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of Rs 1,87,500,” she said.
I propose to change the tax structure in this regime by reducing the number of slabs to five & increasing the tax exemption limit to 3 lakhs: FM @nsitharaman
#AmritKaalBudget #UnionBudget2023 @nsitharamanoffc @IncomeTaxIndia @FinMinIndia pic.twitter.com/SQZ1GuTfnl— PIB in Odisha (@PIBBhubaneswar) February 1, 2023
Sitharaman also proposed to reduce the surcharge for highest income earners from 37% to 25%, taking the highest tax rate down to 39%.
“Lastly, the limit of Rs 3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was fixed in the years 2002, which the highest basic pay in the government was Rs 30,000 pm in line with the increase in government salaries, I am proposing to increase this limit to Rs 25 lakh,” she said.
She also announced ‘Mahila Samman Saving Certificate’ – one-time small savings scheme with Rs 2 lakh deposit for a period of two years with a fixed interest of 7.5%. A partial withdrawal option will also be available.
She added that the average processing time for income tax returns has been reduced from 93 days to 16 days.
