Finance Minister Nirmala Sitharaman pointed out that the new income tax regime is “very attractive” as the tax exemption limit has been hiked to Rs 3 lakh, from Rs 2.5 lakh earlier. Besides, a standard deduction of Rs 50,000 too has been allowed under the scheme. This regime will benefit the majority of middle-class taxpayers.
Union Finance Minister Nirmala Sitharaman on Friday participated in a general discussion on the Union Budget 2023-24 in Lok Sabha and said that the budget balances development need with fiscal prudence. “That is a very difficult balance, it is a very delicately balanced tact,” the FM noted.
During her address, the FM also spoke about the rising inflation, highlighting that the government and the Reserve Bank of India took many pre-emptive steps on inflation. “Since the pandemic when the economy dipped by minus 23, our efforts to recover the economy have been through the capex route (capital expenditure route) from the government’s side,” she added.
Why new income tax regime is attractive?
FM Sitharaman presented the Union Budget 2023-24 on February 1 in which she announced a slew of changes in the new income tax regime in a bid to make it more attractive for taxpayers. Explaining why the new regime is appealing, the minister noted that it will leave higher disposable income in the hands of people. The new tax regime now offers a rebate on annual income of up to Rs 7 lakh.
Pointing out that the new tax regime is “very attractive” as the tax exemption limit has been hiked to Rs 3 lakh, from Rs 2.5 lakh earlier. Besides, a standard deduction of Rs 50,000 too has been allowed under the scheme. This regime will benefit the majority of middle-class taxpayers, according to the FM.
“Since the enhanced rebate limit is unconditional, it leaves higher disposable income in the hands of people,” Sitharaman underscored, adding that the Budget 2023 focuses on the middle class, employment generation, MSME, agriculture sector, rural population, health and green growth.
Tax slabs under new income tax regime
Under the revamped concessional tax regime, which will be effective from the next fiscal, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5 per cent; Rs 6-9 lakh at 10 per cent, Rs 9-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent.
However, no tax would be levied on annual income of up to Rs 7 lakh.