Union Budget 2023: New vs Old Tax Regime – See What Has Changed

New Delhi:

Finance Minister Nirmala Sitharaman has elevated the rebate restrict for particular person taxpayers from Rs 5 lakh to Rs 7 lakh a yr.

“..At present, these with revenue as much as Rs 5 lakh don’t pay any revenue tax in each outdated and new tax regimes. I suggest to extend the rebate restrict to Rs 7 lakh within the new tax regime. Thus, individuals within the new tax regime, with revenue as much as Rs 7 lakh is not going to should pay any tax,” Ms Sitharaman mentioned whereas presenting Funds 2023 in parliament at present.

She additionally introduced new tax slabs and scrapped the outdated twin-structure system that was unboxed in 2020, which taxed residents underneath 25 per cent with out exemptions and 30 per cent with exemptions allowed.

The brand new slabs are:

Rs 0-3 lakh – no tax

Rs 3-6 lakh – taxed at 5 per cent

Rs 6-9 lakh – taxed at 10 per cent

Rs 9-12 lakh – taxed at 15 per cent

Rs 12-15 lakh- taxed at 20 per cent

Above Rs 15 lakh – taxed at 30 per cent

“I had launched, within the yr 2020, the brand new private revenue tax regime with six revenue slabs ranging from Rs 2.5 lakh. I suggest to vary the tax construction on this regime by decreasing the variety of slabs to 5 and growing the tax exemption restrict to Rs 3 lakh,” Ms Sitharaman mentioned.

In Funds 2020, the Finance Minister had given an choice to particular person taxpayers to both proceed within the outdated fee, underneath which they may nonetheless declare tax exemption, or go for the lowered new fee however with no scope for claiming exemptions.

The outdated tax regime had 30 per cent tax fee for these whose revenue was Rs 15 lakh a yr, however they may declare exemptions.

Those that opted for the brand new regime first introduced in 2020 and whose revenue was over Rs 15 lakh have been taxed at 25 per cent, however they may not declare exemptions.