Budget 2023 New Income Tax Slab
| Income | Tax rate |
| Up to Rs. 3,00,000 | 0% |
| Rs. 300,000 – Rs. 6,00,000 | 5% on income exceeding Rs 3,00,000 |
| Rs. 6,00,000 – Rs. 900,000 | Rs 15,000 + 10% on income exceeding Rs 6,00,000 |
| Rs. 9,00,000 – Rs. 12,00,000 | Rs 45,000 + 15% on income exceeding Rs 9,00,000 |
| Rs. 12,00,000 – Rs. 1500,000 | Rs 90,000 + 20% on income exceeding Rs 12,00,000 |
| Above Rs. 15,00,000 | Rs 150,000 + 30% on income exceeding Rs 15,00,000 |
What is Income Tax Slab?
Income tax is a tax collected by the government on the income earned by individuals above a certain amount.
Income tax in India is collected on the basis of the income tax slab system.
- Different rates of income tax is levied on different amounts of income earned.
- Only income above a certain amount is taxed.
For example, a person earning Rs 11 lakhs as income would fall under the Rs 9 lakhs to Rs 12 lakhs slab. The rate applicable to this income tax slab would be 15% on the amount exceeding Rs 9 lakhs.
To calculate this:
11,00,000 (-) 9,00,000 = 2,00,000
Therefore, this person would pay Rs 45,000 plus 15% of 2,00,000 which is 30,000 – bringing the total tax payable to Rs 75,000.
Income Tax Rebate Budget 2023
| Income Tax Rebate U/S 87A | Existing | Proposed |
| Total income (upto) | 5,00,000 | 7,00,000 |
| Tax rebate (maximum) | 12,500 | 25,000 |
Until now, the minimum income that a person had to earn was 5 lakhs. Only income above 5 lakhs was taxed according to the income rates given.
With the 2023 Union Budget, this minimum taxable income was changed to 7 lakhs. Only those who earn income above Rs 7,00,000 will be taxed.
Further, the maximum tax rebate of income tax until now was Rs 12,500. With the Budget 2023, the maximum tax rebate of income tax is Rs 25,000.
Differences Between New Tax Regime and Old Tax Regime Budget 2023-24
In the Union Budget 2023, it was announced that the default option would no longer be the old tax regime. From this year onwards, the default option will be the new tax regime.
Let’s look at the differences between the old and new regimes.
| Criteria | Old Tax Regime | New Tax Regime |
| Tax Rates | Tax rates were higher under the old tax regime. For example, the highest tax rate was 30% | Under the new tax regime, the highest tax rate is 22%. |
| Tax Exemptions | There were more exemptions under the old tax regime. | Under the new tax regime, only limited deductions are available. |
| Tax Structure | The old tax regime had a complicated tax structure. | Under the new tax regime, the tax structure is simpler and more streamlined. |
| Taxability of Investments | Investments was taxed at higher rates under the old tax regime. | Under the new tax regime, investments are taxed at lower rates. For example, investments in equity-oriented mutual funds are now only taxed at 10%. |
Old Tax Regime vs New Tax Regime: Which is Better?
The new tax regime of India is beneficial for taxpayers because it offers a more simplified and reduced tax rate structure. It also offers other tax benefits like exemptions for certain incomes and deductions for certain expenses.
The new regime also includes a number of measures to reduce the compliance burden, such as allowing taxpayers to file their taxes electronically and reducing the number of documents that need to be submitted in order to file returns.
However, the old tax regime may be better for some taxpayers, depending on specific circumstances. Ultimately, it is best to consult with a tax professional to decide which regime is best for each individual situation.
FAQs
What is the new income tax slab?
Up to Rs. 3,00,000 = 0%
Rs. 3,00,000 - Rs. 6,00,000 = 5% on income exceeding Rs 3,00,000 Rs. 6,00,000 - Rs. 900,000 = Rs 15,000 + 10% on income exceeding Rs 6,00,000
Rs. 9,00,000 - Rs. 12,00,000 = Rs 45,000 + 15% on income exceeding Rs 9,00,000
Rs. 12,00,000 - Rs. 1500,000 = Rs 90,000 + 20% on income exceeding Rs 12,00,000
Above Rs. 15,00,000 = Rs 150,000 + 30% on income exceeding Rs 15,00,000
What is the limit of tax free income?
Until now, the limit of tax free income was 5 lakhs. Only income above 5 lakhs was taxed according to the income rates given. With the 2023 Union Budget, this minimum taxable income was changed to 7 lakhs. Only those who earn income above Rs 7,00,000 will be taxed.
How is tax calculated on salary?
Tax on salary is calculated taking into account many factors like age, amount of income, investments and others. After deducting investments and TDS, the final amount is liable to be paid as tax on salary, or income tax.
What is the income tax slab for FY 2022-23?
Income tax slab for FY 2022-23 is given below.
Up to Rs. 3,00,000 = 0%
Rs. 3,00,000 - Rs. 6,00,000 = 5% on income exceeding Rs 3,00,000 Rs. 6,00,000 - Rs. 900,000 = Rs 15,000 + 10% on income exceeding Rs 6,00,000
Rs. 9,00,000 - Rs. 12,00,000 = Rs 45,000 + 15% on income exceeding Rs 9,00,000
Rs. 12,00,000 - Rs. 1500,000 = Rs 90,000 + 20% on income exceeding Rs 12,00,000
Above Rs. 15,00,000 = Rs 150,000 + 30% on income exceeding Rs 15,00,000
How can I reduce my income tax?
You can reduce your income tax liability by investing in products that come under Section 80C, like PPF, PDF, and ULIP. You can also claim deductions on House Rent Allowance. Another good way to save tax is by donating to charity, since charity donations are not taxed.
Which tax slab is best, old or new?
The new tax regime of India is beneficial for taxpayers because it offers a more simplified and reduced tax rate structure. However, the old tax regime may be better for some taxpayers. Ultimately, it is best to consult with a tax professional to decide which regime is best for each individual situation.
What is basic exemption limit?
The maximum amount of income which is not chargeable to Income-tax in case of Individual, HUF/ AOP/ BOI/ Artificial Juridical Person as per the Union Budget 2023 is Rs 2,50,000.
