Union Budget 2023 New Income Tax: Check 5 Significant Announcements on Personal Income Tax

Finance Minister Nirmala Sitharaman on Wednesday proposed a slew of income tax benefits for the common man which would change as per the Budget release as of April 1.

New Delhi: Giving a significant relief to salaried workers and the middle class, Finance Minister Nirmala Sitharaman announced an increase in the income tax rebate limit on Wednesday. The FM announced a significant adjustment to tax slabs today (February 1) while presenting her sixth consecutive Budget in Parliament, providing individual tax payers access to additional money.

These slabs will change as per the Budget release as of April 1.

FM Sitharaman made the following 5 major announcements on personal income tax in the Union Budget 2023:

1.  For tax payers earning up to Rs 7 lakh in annual income, it would not be subject to tax. Due to rebates under both the old and new tax systems, people with total annual incomes up to Rs 5 lakh no longer pay any taxes, the FM had observed in her Budget presentation. In the new tax system, this rebate cap has been increased to Rs 7 lakh. For individuals who choose the new tax regime and get rebate up to Rs 7 lakh on income, a move will result in savings of Rs 33,800. Up to Rs 10 lakh in income would result in savings of Rs 23,400, while up to Rs 15 lakh in income would result in savings of Rs 49,400, said the FM.

2. In the concessional tax regime, which was originally introduced in 2020–21, the number of tax slabs has bee decreased to five from the previous six.

3. Under the amended concessional tax scheme, there would be no tax on income up to Rs 3 lakh. Income between Rs. 3-6 lakh would be subject to a 5% tax rate, Rs. 6-9 lakh to a 10% tax rate, Rs. 9-12 lakh to a 15% tax rate, Rs. 12-15 lakh to a 20% tax rate, and Rs. 15 lakh and beyond to a 30% tax rate.

4. The FM also gave taxpayers a standard deduction of Rs 50,000 under the new system, which forbids assessees from claiming exemptions or deductions on their investments. For individuals with a salary income of roughly Rs 5.5 crore, this would result into a savings of about Rs 20 lakh, FM said.

5. For high net worth persons with income over Rs 2 crore, Sitharaman also reduced surcharge from 37% to 25% for those with high salaries.