Income Tax News: New Income Tax regulations were implemented by the government in the Union Budget 2023. The New Income Tax Regime's designation as the default tax structure was one of the key regulations governing personal taxation.
Key Message from Finance Minister
Union Finance Minister Nirmala Sitharaman stressed during her Budget speech that the new income tax regime's proposals are meant to empower people by letting them keep a larger portion of their earnings. This strategy transfers accountability to the tax payers, giving them the freedom to decide how their money is invested instead of depending on government disincentives or incentives.
Revised Tax Slab
Adjustments were made to the income tax slabs within this framework in order to increase the attractiveness of the new tax regime.
- No tax on income up to Rs 3 lakh
- 5% for income between Rs 3 lakh and Rs 6 lakh
- 10% for income from Rs 6 lakh to Rs 9 lakh
- 15% for income from Rs 9 lakh to Rs 12 lakh
- 20% for income from Rs 12 lakh to Rs 15 lakh
- 30% for income exceeding Rs 15 lakh
Limit on tax exemptions under the new tax Regime
Under the new tax regime, the tax exemption threshold has been raised. Tax exemptions on income up to Rs 3 lakh, which was previously only available on income up to Rs 2.5 lakh, are now available to those who adopt the new tax system. This implies that starting this year, an additional Rs 50,000 will be exempt from taxes.
A new tax Regime takes effect by default
The default tax regime is now the new one. In other words, the new tax regime will be displayed by default when an ITR is filed. You will need to make a manual selection if you wish to stick with the outdated tax system.
Increase in tax Rebate
In the new tax regime, the rebate limit has been raised from Rs 12,500 to Rs 25,000 under Section 87A of the Income Tax Act.
A standard deduction of Rs 50000
Under the previous tax system, employees and pensioners who paid income tax were only eligible for tax deductions of Rs 50,000 until last year. Employees and pensioners opting for the new tax regime will also receive a standard deduction of Rs 50,000 starting this year.
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