New Income Tax Slabs: Budget 2023 Updates & Highlights

New Income Tax Slabs Budget 2023 Updates & Highlights: Tax Exemptions Hiked, Slabs Reduced

Revised Income Tax Slab Rates in India for FY 2023-24

Nirmala Sitharaman’s budget speech 2023 had several proposals for the benefit of taxpayers in the lowest and highest tax breaks. As per the FM’s proposal, individuals earning up to Rs 7 lakh will not have to pay any tax under the new regime. For individuals in the highest tax bracket, the finance minister has proposed to reduce the highest surcharge rate from 37 percent to 25 percent in the new tax regime. As a result of this proposal, the maximum tax rate for those in the highest tax bracket would be reduced to 39 percent. The Finance Minister also announced several proposals for the benefit of salaried individuals, senior citizens, and pensioners.

Proposed Changes in Tax Rates

In the alternative tax regime under section 115BAC, a revision in the basic exemption limit and a number of slabs has been proposed.  The revised basic exemption limit will be INR 3,00,000 and for every additional INR 3,00,000 of income, the next slab rate will be applicable.  The highest slab rate of 30% will continue to apply for income above INR 15,00,000.

• The limit of total income eligible for exemption under section 87A has been proposed to be raised from Rs 5,00,000 to Rs 7,00,000 for assessees opting for the new tax regime.

• Under the new tax regime, the highest surcharge rate of 37% is proposed to be reduced to 25% on income above INR 5,00,00,000.

• The alternative tax regime of section 115BAC is proposed to be applicable to the association of persons (AOP) [(other than a co-operative society]), body of individuals (BOI), and artificial juridical persons (AJP). 

• It is proposed to extend the standard deduction from salary income to employees opting for the new tax regime.  The new tax regime under section 115BAC is proposed to operate as a default regime.

• Proposes to insert a new section 115BAE, which provides for a lower rate of 15% (plus surcharge and cess) for manufacturing cooperatives established on or after April 1, 2023, and commences production on or before. 31st March 2024 [provided the specified incentive or deduction is not availed]. Further, income derived from or incidental to the manufacture or production of any article or thing will be taxed at 22%.

• It is proposed to insert section 115BBJ which provides for a tax rate of 30% on any income from online gaming.

Highlights

• Tax exemption on capital goods and lithium batteries

• Higher TDS limit of Rs 3 crore for cooperatives

• In the new income tax regime, the exemption limit has been increased to Rs 7 lakh;  The number of slabs has been reduced from seven to five

• Individuals with an annual income of Rs 9 lakh pay tax of only Rs 45,000 only a five percent tax

• Salaried class and pensioners standard deduction increased to Rs 52,000

• Top tax rate reduced to 42.74 percent

Author:

Akansha Upadhyay
Rajasthan
B.A.LL.B 4th year student of Banasthali Vidyapith, Rajasthan