Overhaul Of Personal Income Tax Slabs

In her budget speech, Finance Minister Nirmala Sitharaman proposed an overhaul of the personal income tax slabs via the Finance Bill, 2023.

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Rebate Increased In New Tax Regime

Currently, those with income up to Rs 5 lakh don't have to pay any direct tax in both old and new regimes. The rebate will be increased to Rs 7 lakh in the new tax regime.

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No Income Tax Till Rs 7 Lakh Under New Regime 

Individuals opting for new tax regime, which was introduced in Budget 2020, with an income of up to Rs 7 lakh will not have any tax liabilities.

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Tax Exemption Increased

Number of slabs have been reduced to five and tax exemption has been increased to Rs 3 lakh.

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Benefits For Salaried Class And Pensioners

The benefit of standard deduction to be extended to the new tax regime. Each salaried person with an income of Rs 15.5 lakh or more will stand to benefit by Rs 52,500.

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Highest Surcharge Rate Reduced Under New Tax Regime

The highest surcharge rate is proposed to be reduced from 37% to 35% in the new tax regime. This will result in reduction of the maximum tax rate to 39%.

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Limit For Exemption On Leave Encashment Increased

The limit of Rs 3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in 2002. This limit is proposed to be increased to Rs 25 lakh.

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