This year the Union Budget came with welcome changes for various categories of taxpayers. The Hon’ble Finance Minister, unlike the previous years, doled out some benefits for every cross-section of people by announcing a slew of measures for the taxpayers. In the New Tax Regime, the introduction of the standard deduction, changes in the basic exemption limit, reduction of the peak marginal tax rate, changes in the income tax slab rates, and more, all are strong positives. There’s a strong feel-good factor all around. Now, let’s take a closer look at the key changes.
Here are the key income tax rule changes announced in Budget 2023:
- Tax rebate limit raised from Rs. 5 lacs to Rs. 7 lacs
Under section 87A of the Income-tax Act, 1961, the limit of total income for rebate has been increased to Rs.7 lacs from Rs.5 lacs for the ones opting for this new tax region. Simply, if your taxable income is less than Rs. 7 lacs, you need not have to pay any income tax.
- Changes in income tax slabs
Under the new tax regime, Budget 2023 has tweaked the income tax slabs. The new tax rates are-
0-3 lacs- 0%
3-6 lacs- 5%
6-9 lacs- 10%
9-12 lacs- 15%
12-15 lacs- 20%
Above 15 lacs- 30%
- Introduction of the standard deduction
To the optional tax regime, the standard deduction has been extended. Salaried individuals who opt for the simplified tax regime may avail of a standard deduction of Rs. 50,000. Also, under the new tax regime, pensioners can opt for a standard deduction of %s.15,000.
- For the super-rich, the surcharge reduced
In the new tax regime, on income above Rs. 5 crores, the highest rate of surcharge of 37% is reduced to 25%.
These changes are effective from April 1, 2023, and are aimed at reducing the tax burdens on individuals as well as increasing their spending power, particularly in the present economic scenario affected by the rising cost of living and inflation.