New Tax Regime Will Be Default System, Payers Can Opt For Old Regime

FM Sitharaman also proposed to increase the income tax rebate limit to Rs 7 lakh under the new tax regime.

FM Sitharaman also proposed to increase the income tax rebate limit to Rs 7 lakh under the new tax regime.

Source : Getty

Finance Minister Nirmala Sitharaman on Wednesday announced that the New Tax regime will be the default tax system. The income taxpayers now have to opt for the old regime. The announcement was made during her Budget 2023 speech. FM Sitharaman also proposed to increase the income tax rebate limit to Rs 7 lakh under the new tax regime. Sitharaman proposed increasing the rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime, meaning individuals who opt for the new regime will not be taxed on annual income up to Rs 7 lakh.

In the new personal income tax regime, introduced in 2020, the tax slab structure has been changed as well. Finance Minister announced the reduction of the number of slabs to five and the tax exemption limit has also been increased to 3 lakhs.

Budget 2023 Tax Slabs Announced

0-3 lakh: Nil

3-6 lakh: 5%

6-9 lakh: 10%

9-12 lakh: 15%

12-15 lakh: 20%

Above 15 Lakh: 30%

At present, salaried individuals have the choice to either stick with the traditional tax regime and avail common deductions and exemptions or switch to the new income tax regime with fewer deductions and exemptions.

Under the new tax regime, individuals must forego 70 tax deductions and exemptions, including HRA and LTA exemptions and the Section 80C deduction of up to INR 1.5 lakh.

In 2020, a simpler tax regime for individuals, without exemptions or deductions, was introduced through Section 115BAC. This was designed to benefit individuals who were unable to make investments and claim deductions.

The Budget Session of Parliament began on Tuesday, January 31. The first part of the Budget session of parliament will conclude on February 13. and it will reconvene on March 12 for the second part of the Budget Session will end on April 6.

ALSO ON ABP LIVE | Union Budget 2023: Jewellery Becomes More Expensive, Phones And TV To Cost Less. Check Full List