Income Tax News: 5 Key IT Changes Announced By Nirmala Sitharaman in 2023 That Can Make a difference in Your Personal Income

Income Tax News: Finance Minister Nirmala Sitharaman indicated in her 2023 Budget speech that the income tax brackets would be reduced from six to five under the new personal tax regime. The government also enhanced the basic tax exemption level under the new tax regime from Rs 2.5 lakh to Rs 3 lakh, which appears to be a measure aimed at the middle class.

New tax Regime as the default option

FM Sitharaman further stated that the new tax Regime will now be the default. The new tax scheme went into effect in 2020.

Income Tax Exemption Adjustment

People earning up to Rs 5 lakh are exempt from paying income tax under both the old and current regimes. In the new tax regime, the maximum has been doubled to Rs 7 lakh in the Budget. In other words, anyone earning up to Rs 7 lakh are exempt from paying tax.

Deduction For Salaried Individuals, Pensioners, and Family Pensioners

Under the new tax framework, FM has implemented a standard deduction for salaried individuals, pensioners, and family pensioners. The previous tax regime provided a standard deduction of Rs 50,000 to salaried personnel and pensioners. In addition to the rebate, salaried individuals earning up to Rs 7.5 lakh are exempt from paying tax under the new tax regime.

Increased Limit for Leave Encashment Exemption

The government recommended raising the limit for tax exemption on leave encashment upon retirement of non-government paid personnel from Rs 3 lakh to Rs 25 lakh. The Rs 3 lakh restriction was last set in 2002, during the Atal Bihari Vajapayee government

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