Finance Minister Nirmala Sitharaman presented the much-anticipated budget of the Modi government for the fiscal years 2023–24 on Wednesday. This year, Nirmala Sitharaman is presenting the final full-fledged budget to parliament ahead of the 2024 general elections.
Nirmala Sitharaman announced that the new income tax slabs will be the default regime for the year. She revealed that individuals earning less than Rs. 7 lakhs per annum would receive a 0% income tax rebate- compared to last year’s income tax rebate limit of Rs. 5 lakhs per annum. At the same time, the basic exemption limit is increasing to Rs 3 lakh per annum under the new tax regime.
While presenting the budget, Finance Minister announced that “Currently, those with an income of Rs 5 lakh do not pay any income tax, and I propose to increase the rebate limit to Rs 7 lakh in the new tax regime,”
The new regime income tax slabs on total income are:
– Rs 0-3 lakhs per annum will receive nil or 0% income tax.
– Above Rs 3 lakh up to Rs 6 lakhs per annum income will be charged a 5% income tax.
– Above Rs 6 lakhs up to Rs 9 lakhs income will receive a 10% income tax.
– Above Rs 9 lakhs up to Rs 12 lakhs per annum income will receive a 15% income tax.
– Above Rs 12 lakhs up to Rs 15 lakhs per annum income will receive a 20% income tax.
– Above Rs 15 lakhs per annum income will receive a 30% income tax.
Additionally, the Finance Minister proposed that in the new tax regime, the maximum additional charges (surcharges) on total income will decrease from 37% to 25%. Surcharges will apply at the rate of 10% on total income above Rs 50 lakhs up to Rs 1 crore, 15% on income above Rs 1 crore up to Rs 2 crores and 25% surcharges on total income above Rs 2 crores.
Along with the reviewed income tax slabs, Nirmala Sitharaman also addressed that taxpayers can choose between the new and old tax regimes. However, if the taxpayers opt for the old tax regime, they have to abide by the old tax regime rules and the new income tax slabs will not be applicable.