New Tax Regime: Lesser slabs, reduced taxes & higher tax exemption!
Check it out to see how it will benefit you!
With an estimated 7 per cent growth for the current year, which is the highest among all major economies, India has gained recognition as a shining star. From being the tenth largest economy in the world, India's economy has grown and moved up to the fifth largest in the last 9 years.
In terms of benefits for middle-class taxpayers, key significant announcements were made by Finance Minister Nirmala Sitharaman in her budget speech on February 1, 2023.
The old income tax regime has not been repealed. The new tax regime, which consists of new income tax slabs and modified tax rates, has been decided by the Centre as the default tax regime. A salaried individual now has the choice of selecting between the two regimes.
| New Tax Regime (Revised) |
| Tax Slab |
Tax Rate (%) |
| 0-3 Lakh |
Nil |
| 3-6 Lakh |
5 |
| 6-9 Lakh |
10 |
| 9-12 Lakh |
15 |
| 12-15 Lakh |
20 |
| Above 15 Lakh |
30 |
| New Tax Regime (Previous) |
| Tax Slab |
Tax Rate (%) |
| 0-2.5 Lakh |
Nil |
| 2.5-5 Lakh |
5 |
| 5-7.5 Lakh |
10 |
| 7.5-10 Lakh |
15 |
| 10-12.5 Lakh |
20 |
| 12.5-15 Lakh |
25 |
| Above 15 Lakh |
30 |
Furthermore, the budget 2023 proposed lowering the surcharge rate from 37 per cent to 25 per cent for those earning more than Rs 5 crore a year. A surcharge is an additional income tax that higher-income taxpayers must pay.
The Finance Minister has raised the rebate limit to make annual income up to Rs 7 lakh tax-free. The question now is what exactly is this tax rebate? A tax rebate is a refund that you are entitled to if your taxes paid exceed your tax liability. Hence, a person earning up to Rs 7 lakh per year will not have to pay any tax under the new regime.
We can therefore conclude that the middle-class, salaried class or small business category taxpayers were finally the focus of the budget for 2023.