What Will Change In Personal Income Tax After Budget 2023?
In the last full Budget before Prime Minister Narendra Modi seeks a third term, the government today unveiled a slew of measures aimed at appeasing India’s middle class.
Income up to ₹ 7 lakh would now be tax-free versus the earlier threshold of ₹ 5 lakh. With high inflations eating into people’s earnings, the government’s announcement comes as a relief for the middle-class.
Two years ago, the government had introduced a new personal tax regime and tax-payers could choose between the old and new regime. Ms Sitharaman today announced that the new regime unveiled this year would now become the default. She added that tax-payers would though still be able to request for the old tax structure, which allows for exemptions as the new regime has no scope for exemptions, though it has a higher tax-free ceiling of ₹ 7 lakh.
The number of tax slabs have been reduced from six to five. The Centre has also increased the tax exemption limit from ₹ 2.5 lakh to ₹ 3 lakh.
The highest tax rate in personal income tax, which currently stands at 42.74 per cent, has now been reduced to 39 per cent. “Salaried person with an income of ₹ 15.5 lakh or more will thus stand to benefit by ₹ 52,500,” Ms Sitharaman said in her Budget speech today.
She also proposed reducing the highest surcharge to 25 per cent from 37 per cent in the new tax regime.