With the new changes added to the income tax slabs, the new regime has been revamped to make it more lucrative for taxpayers. However, the old structure remains unchanged and offers attractive deductions for individuals not qualifying for tax rebates under the new regime.

But what are the changes incorporated in the new income tax slabs? Look at the budget document to understand and discuss the additions and alterations.

The New Income Tax Regime – Initial Years

The new regime was introduced in 2020 to gradually condition taxpayers and convince them to shift to a uniform tax system. The old system was still popular among taxpayers at the time since it offered over 70 valuable deductions for people earning more than the tax rebate limit.

When announced in budget 2020, the new tax regime income tax slabs did not attract significant attention. The only change was that the income tax rates were marginally lower while not incorporating the deductions of the old regime.

For instance, the old structure required individuals earning between INR 5 lakhs to INR 10 lakhs to pay approximately 15% in taxes. With the new regime in 2020, people earning between INR 5 lakhs to INR 7.5 lakhs had to pay 10%, and those earning between INR 7.5 lakhs to INR 10 lakhs incurred a tax rate of 15%.

Yet, the new regime did not attract significant attention until budget 2023-24.

Additions to the New Income Tax Regime – Budget 2023

The finance minister of India, Nirmala Sitharaman, conveyed four announcements pertaining to income tax slabs. Here is a breakdown of these announcements.

• The income tax slab new tax regime for 2023-24 comprises 6 income brackets, up from 5 present the previous year. Taxation now starts for professionals earning more than INR 3 lakhs per year, compared to INR 2.5 lakhs the year before.
• The new tax regime is now the default option for taxpayers in the country. They will be taxed according to the new income brackets if they do not choose the old structure while filing ITR.

The tax rebate limit increased to INR 7 lakhs from INR 5 lakhs. Taxpayers qualifying for rebates can get benefits of up to INR 25,000 as standard deductions to avoid taxation.

Wrapping Up

The changes in the new regime have allowed for significant savings. So, why not track this money and assess your spending patterns using Ask.Fi? You can review your spending patterns and see your money grow. With the 360-degree view of your expenses, you can filter your spending by category and time. Moreover, through the Fi app, you can invest the money you save in Smart Deposits and commission-free mutual funds.

Frequently Asked Questions

1. Which form is required for 115BAC?

Form 10-IE is your go-to for filing taxes under the new regime, in line with sections 115BAC and 115BAD. According to Rule 21 AG, every individual and Hindu undivided family looking to file under the new tax regime (section 115AC) has to submit Form 10-IE in electronic mode.

2. What are the details of the new income tax regime?

While the new income tax regime was introduced in 2020, budget 2023-24 incorporated some significant changes to make it more lucrative:

• 6 income brackets with taxation starting for people earning above INR 3 lakhs
• The new tax regime is the default option; you can choose to opt for the old system while filing the ITR if you wish to do so
• Increased tax rebate on incomes up to INR 7 lakhs
• No deductions available except the standard deduction