Budget 2023: Salaried Individuals Can Switch Between Tax Regimes, Says FM Sitharaman In Parliament

In her Union Budget speech 2023, Finance Minister Nirmala Sitharaman said the new tax regime will become the default regime from FY23-24, but citizens can also avail the benefit of the old tax regime

Finance Minister Nirmala Sitharaman made it clear in the Parliament on Friday that salaried people can change their tax system as many times as they want.

Finance Minister Nirmala Sitharaman made it clear in Parliament on Friday that salaried people can change their tax system as many times as they want. “If people choose the new tax system, they can revert to the old tax system again and go back to the new system as many times as they want to, the FM said.”

However, professionals and businesses who choose the new system will get only one chance to go back to the old system, after that they will not be able to make changes, sources reported the minister as saying to Members of the Parliament.

“We are also making the new income tax regime the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime,” the FM said in her Budget speech.

CBDT chairman Nitin Gupta also clarified on Friday that the old tax regime remains untouched as the new regime has only been modified. " Old tax regime is untouched; we have a modified new regime The new tax scheme proposed in the budget is beneficial for everyone including those earning Rs 5-7 lakh as they will get tax exemption. Govt to bear Rs 25,000 tax on Rs 3-7 lakh income," said Gupta, according to the news agency ANI. 

 

"If salary is Rs 7 lakh & above, there is a standard deduction of Rs 50,000. Salaried middle class can choose from two regimes & pay taxes. The same scheme applies to different slabs. He added that the surcharge for more than 5 crores is brought down to 25 per cent.

 

In a bid to encourage the adoption of the new tax regime, the government introduced several changes in the Union Budget for 2023-24. The Budget proposed tax rebates on income up to Rs 7 lakh under the new regime, compared to Rs5 lakh offered under both the old and new income tax regimes.

The tax slabs have also been brought down to five from six, raising the tax exemption limit from Rs2.5 lakh to Rs3 lakh. To encourage more assesses to switch to the new regime, the budget also proposed to introduce a Rs 50,000 standard deduction, which was so far available only under the old regime.

The new tax slab rates applicable from 2023-24 under the new tax regime are up to Rs 3 lakh it will be nil; from Rs 3 lakh to Rs 6 lakh income (5 per cent will be taxed); from Rs 6 lakh – Rs9  lakh (10 per cent); from Rs 9 lakh - Rs 12 lakh (the tax is 15 per cent); Rs 12 lakh to Rs 15 lakh (20 per cent) and above Rs 15 lakh it is 30 per cent.