Budget 2023: FM announces tax relief for the middle-class

While announcing the Union Budget 2023 in Parliament, FM Nirmala Sitharaman announced an increase in the income tax rebate limit from 5 lakh to 7 lakh rupees in the new tax regime. Under the new tax regime, the basic exemption amount has been increased to Rs 3 lakh from Rs 2.5 lakh previously. In addition, the number of tax brackets under the new tax regime has been reduced from six to five.

Additionally, an individual with an annual income of 9 lakh rupees will now pay only 45,000 rupees as income tax, as per the new tax regime, which is a reduction of ₹15,000 from the present ₹60,000.

The following are the new income tax brackets –

• No tax will be levied on yearly income up to 3 lakh,
• 5 percent tax on income between 3 to 6 lakh rupees
• 10 percent tax on income between 9-12 lakhs
• 15 percent tax on income between 12-15 lakhs
• And the highest tax rate of 30 percent on income above 15 lakh rupees.

“Currently those with income up to Rs 5 lakh do not pay any income tax in both the old and new tax regimes. I propose to increase the rebate limit to Rs 7 lakh in the new tax regime. Thus, under the new tax regime, individuals earning up to Rs 1 lakh will not have to pay any tax,” FM Sitharaman announced.

A person earning Rs 15 lakh will now have to pay Rs 1.5 lakh as income tax, less than the present Rs 1.87 lakh, according to the new tax structure. As per the recent announcement, the government will give a higher limit of Rs 2 lakh per individual for loans and cash deposits by Primary Agricultural Credit Societies.

The government also proposed a reduction in the highest tax surcharge rate from 37 percent to 25 percent in the new tax regime.

The FM suggested that pensioners, including family pensioners, should be able to take advantage of the standard deduction under the new tax system. Thus, each salaried individual with a salary of Rs 15.5 lakh or more stands to gain Rs 52,500.