New Income Tax Slabs & Rates for FY 2023-24

The government of India levies tax on income earned by every individual or business – this is called Income Tax. Revised income tax rates are announced every year in the Union Budget by the Finance Minister. If an individual’s income is above a specific minimum limit, he/she must pay income tax to the government.

2023 Union Budget Income Tax Highlights

• Minimum taxable income is now Rs 3,00,000 – increased from the previous Rs 2,50,000 minimum amount
• The new tax regime is now the default option for taxpayers. The old regime will still be available but must be chosen by the taxpayer specially.
• The highest surcharge levied on personal income tax, which was 37% is now reduced to 25%.
• Leave encashment limit of non-government salaried employees retirement has increased to Rs 25 lakh from the previous limit of Rs 3 lakh.

What is Income Tax Slab?

Income tax is a tax collected by the government on the income individuals earn 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.

Here are the revised income tax rates, with the revised slabs for the financial year 2023-24.

Budget 2023 Updated & New Income Tax Slabs

For individuals who earn income below Rs 3,00,000 no tax is levied. Previously, this minimum taxable income was Rs 2,50,000. Anybody earning income above Rs 3,00,000 will have to pay 5% tax on every rupee that is more than Rs 3,00,000.

Income Tax Slab for Senior Citizens

(Individuals between 60 and 80 Years of Age)

Note: An additional 4% health and education cess is applicable on the tax amount 

Income Tax Slab for Super Senior Citizens

(Individuals Above 80 Years of Age)

Note: An additional 4% health and education cess is applicable on the tax amount

Income Tax Rebate Budget 2023

Income tax rebate is the refund given to a person who paid more tax than liable. Any excess money is refunded at the end of the year along with interest.

With the 2023 Union Budget, anybody earning an income less than Rs 7 lakh can avail income tax rebate.

Previously, the minimum income that a person had to earn in order to get this rebate was 5 lakhs. 

The previous maximum tax rebate of income tax was Rs 12,500. With the Budget 2023, the maximum tax rebate of income tax is Rs 25,000. 

Surcharge for Income Tax FY 2023-24

Note: 37% surcharge  does not apply to individuals, HUF, BOI, AJP and AOP under new regime

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. 

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. 

This new regime is more beneficial to taxpayers earning lower incomes since it offers lower income tax slabs and more benefits to those without investments. The old regime is beneficial to those earning high incomes who opt for investing in high tax saving schemes.

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.

Deductions & Exemptions – New Tax Regime vs Old Tax Regime

With the new Income Tax Regime there have been many changes to the deductions and exemptions available to people paying tax on their income. Here is a comparison between the old tax regime and the new regime of the deductions and exemptions available.

*EPF/LIC/ELSS/PPF/FD/Children’s tuition fee 

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