Budget 2023 announces new income tax slabs & rates with increased basic exemption limit of Rs 3 lakh and reduced surcharge.

Revised Income Tax Slabs & Rates for New Tax Regime in Budget 2023

The Indian government has announced new income tax slabs and rates in the Budget 2023. The basic exemption limit has been increased to Rs 3 lakh from the current Rs 2.5 lakh, and the number of income tax slabs has been reduced from 6 to 5. The new tax regime also includes an enhanced rebate under Section 87A, which has been raised from Rs 5 lakh to Rs 7 lakh. As a result, individuals earning up to Rs 7 lakh and opting for the new tax regime will not be required to pay any taxes.

Revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25):

Income tax slabs under new tax regimeIncome tax rates under new tax regime
O to Rs 3 lakh0
Rs 3 lakh to Rs 6 lakh5%
Rs 6 lakh to Rs 9 lakh10%
Rs 9 lakh to Rs 12 lakh15%
Rs 12 lakh to Rs 15 lakh20%
Income above Rs 15 lakh30%

The new tax regime is the default option, but individuals still have the option to continue with the old tax regime. The surcharge of the highest tax rate has been reduced from 37% to 25% under the new tax regime.

Under the current tax regime, individuals below the age of 60 years, NRIs, and HUFs have the option to choose between the new and old tax regimes each financial year. However, those with business income cannot choose the tax regime every year and can only switch back to the old tax regime once in their lifetime. Individuals with a net taxable income of up to Rs 5 lakh will not be required to pay taxes in either regime as the rebate under Section 87A is available in both. The basic tax exemption limit for individuals under 60 years of age is Rs 2.5 lakh in both regimes, while for senior citizens (above 60 years but below 80 years) and super senior citizens (above 80 years of age), the limit is Rs 3 lakh and Rs 5 lakh, respectively, in the old tax regime. The basic tax exemption limit in the new tax regime is Rs 2.5 lakh, regardless of the taxpayer's age.

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