The 2023-24 Union Budget, presented by Finance Minister Nirmala Sitharaman on February 1st, includes significant changes to the income tax regime in India. These changes are aimed at providing relief to the middle class and promoting inclusive development.
Under the new tax regime, those earning an annual income of up to ₹7 lahks will not have to pay any tax. This is a significant increase from the previous limit of ₹2.5 lahks. The tax slabs have also been revised, with no tax for incomes up to ₹3 lacks, 5% for ₹3-6 lakh, 10% for ₹6-9 lakh, 15% for ₹9-12 lakh, 20% for ₹12-15 lakh, and 30% for incomes above ₹15 lacks.
In addition to these changes, the budget includes a ₹50,000 standard deduction for taxpayers. This deduction will apply to all salary earners under the new tax regime, regardless of their level of income. The standard deduction is a fixed amount that taxpayers can claim as a reduction in their taxable income, regardless of any other deductions or exemptions they may have.
The budget also includes an increase in the income tax rebate limit, from ₹5 lacks to ₹7 lacks. This rebate is a fixed amount that taxpayers can claim as a reduction in their tax liability. It is designed to provide additional relief to those who are earning a moderate income, but who still face a significant tax burden.
The limit for tax exemption on leave encashment for government employees has also been raised from ₹3 lahks to ₹25 lakh. This change is aimed at addressing the issue of declining purchasing power for government employees, whose salaries have not kept pace with inflation in recent years.
As a result of these changes, a person earning ₹9 lakh per year will now pay ₹45,000 in tax, instead of ₹60,000, and an individual earning ₹15 lakh will pay ₹1.5 lakh in tax, down from ₹1.87 lakh. The highest tax rate has been reduced from 42.74% to 39% and the maximum surcharge rate has been lowered from 37% to 25%. These reductions will provide significant relief to those who are facing high tax rates, and will help to promote economic growth and investment.
The focus of the 2023-24 Union Budget is on inclusive development, infrastructure, investment, green growth, youth power, and the financial sector. The government has proposed a number of initiatives to promote these areas, including increased investment in infrastructure and the creation of new job opportunities for young people. The budget also includes measures to promote green growth, such as increased investment in renewable energy and the development of eco-friendly technologies.
In conclusion, the 2023-24 Union Budget includes significant changes to the income tax regime in India, which are aimed at providing relief to the middle class and promoting inclusive development. These changes include an increase in the tax exemption limit, revisions to the tax slabs, and the introduction of a standard deduction and an increased income tax rebate limit. The focus of the budget is on promoting economic growth and investment, and includes a number of initiatives to promote inclusive development, infrastructure, green growth, and the financial sector. The new tax regime will become the default option, but individuals will still have the option to choose the old regime if they prefer
