The finance minister recently announced the income tax slabs & new tax regime in India. This year, FM Smt. Nirmala Sitharaman declared the Union Budget for 2023 on 1 February 2023, bringing many new ITR rules that directly impact individual taxes. Let’s learn about these new income tax slab rules and understand what’s in store for everyone.

Budget 2023 Highlights - Income Tax Slabs New Tax Regime

People pay income taxes based on the income tax slab ranges applicable to them in India. The income tax slab has income ranges with different tax rates. The Union Budget this year proposed five significant changes for personal income tax.

Reducing the tax burden on individual taxpayers was the main highlight of the announcement, including changes in tax structure, slab rates, surcharge rates and exemptions. The FM also announced that people could choose between the old and income tax slabs new regime, whichever benefits them the most.

Understanding Income Tax Slabs New Regime for FY 2023-24

The income tax slabs' new tax regime has significant changes in the tax structure. For instance, the new tax regime slabs now have six tax slabs instead of the previous five. Also, there is an increase in the tax exemption limit to ₹3 lakh. These changes are applicable from 1 April 2023. The revised slab structure is as under:

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Also, consider the old tax slab for reference:

Comparing the old and new tax slabs, here are a few features that differentiate the new regime from the older one:

• Individuals earning up to ₹3 lakhs per annum are exempt from paying taxes
• Earlier, the highest surcharge rate was 37%, but now it’s reduced to 25%
• No deductions or exemptions carried over from the old regime
• Salaries individuals can avail of a standard ₹50,000 deduction while pensioners can claim up to ₹15,000
• If your annual income comes down to below 7L after all deductions, it will not attract tax

Conclusion

The income tax slabs' new tax regime has many exemptions and deductions that boost your finances. Consider the above tax slabs and choose the one offering the maximum benefits. If you’re looking for help to Know Your Money & Grow Your Money, Fi's AI-powered Analyser is the perfect finance management platform. With over 2.5 million people trusting Fi, it provides a 360-degree view of their money. Also, Fi offers subtle nudges to cater to your goal of maximising savings.

Frequently Asked Questions

1. What is the basic exemption limit under the new tax regime for FY 2023-24?

Individuals who earn an income of up to ₹ 3L under the new regime for FY 2023-24 do not have to pay taxes. The government has increased the limit in Budget 2023 from ₹2.5L earlier.

2. What are the surcharge rates applicable in the new tax regime for the FY 2023-24?

The government revised the surcharge rate under the new tax regime for FY 2023-24. The changed surcharge rate applicable in the new tax regime is as follows:

1. Taxable income above ₹50 L - 10%
2. Taxable income above ₹1 crore - 15%
3. Taxable income above ₹2 crore - 25%