No Tax Up To 7 Lakh Rupees, New Tax Regime
If you select the Old Tax Regime, which offers investment exemptions, nothing changes; Unless you choose the old regime, the new regime is now the default.
The central government said today that starting with the 2023–24 fiscal year, incomes up to 7 lakh per year will no longer be subject to income tax. So far, it was Rs 5 lakh. There is a restriction, though: This modification only applies to anyone who select the New Tax Regime.
This new regime, which was introduced in 2020, does not offer the customary exclusions for insurance premiums, mutual funds, or other similar assets. It failed to take off since it frequently led to increased tax burdens. The ultimate amount of their taxable income is then determined for those who choose the old regime, who continue to receive exemptions on investments.
Under the New system, a five-slab structure will be in effect, raising the no-tax slab by 50,000.
No tax will be applied to income between 0 and 3 lakhs; the previous range was 0 to 2.5 lakh.
- Income between Rs. 3 lakh and Rs. 6 lakhs will be taxed at 5%;
- Rs. 6 lakhs to Rs. 9 lakhs at 10%;
- 15% from Rs. 9 lakhs to Rs. 12 lakhs;
- A 20% tax will apply to purchases between Rs. 12 and Rs. 15 lakhs; and
- The portion of income over 15 lakh rupees will be taxed at 30%.
The minister also reduced from 42.7% to 39.0% the highest applicable tax rate in India after surcharges.
The Old Tax Regime’s rates and slabs have not altered.
The Old regime, which has higher tax rates but several exemptions, would now only be accessible upon request, the minister said after listing the slabs, and the new regime will be regarded as the default system for everyone.
She did include a benefit in the new programme: salaried individuals with incomes of at least 15.5 lakhs rupees can now deduct 52,500 rupees as the standard deduction when determining their taxable income.
Near the close of her 87-minute speech, Ms. Sitharaman addressed the tax issue: “I have five significant announcements to make… These mostly help our hardworking middle class.”
The first one dealt with rebates. “In both the Old and New tax systems, people with income up to 5 lakhs do not now pay any income tax. I suggest raising the refund cap in the new tax system to 7 lakhs, “Members of the ruling alliance clapped and applauded for her and Prime Minister Narendra Modi as she made her declaration.
“The second proposal targets people in the middle class. In the year 2020, I had implemented a new personal income tax system with six income brackets starting at 2.5 lakh. I suggest decreasing the number of tax slabs in this regime to five and raising the tax exemption threshold to 3 lakh “Added she.
“An individual with an annual salary of 9 lakh will be obliged to pay only 45,000,” she said as an illustration of how it will help. So far, this has been 60,000.
She continued by stating that each salaried person with an income of at least 15.5 lakh will gain by 52,500 as a result of the Standard Deduction while computing the taxable income of the salaried class and retirees under the new system.
In her fourth pronouncement, she lowered the top rate of relevant taxes from 42.74 percent to 39 percent.
“The last time the 3 lakhs ceiling for tax exemption on leave encashment upon retirement for salaried non-government workers was set was in 2002, when the maximum basic wage in the government was 30,000 per month. I suggest raising this ceiling to 25 lakhs, in accordance with the rise in government pay “added she.