Let us discuss about the key points from the budget presented today. This budget will be effective for the Financial Year 2023-24.
Let us understand the FM's speech concerning Personal income tax.
1) Currently, those with income up to Rs. 5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to Rs.7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs7 lakh will not have to pay any tax.
If an employee choses NEW TAX REGIME, then there is NO tax if the Gross salary and Other taxable income is less than Rs.7 lacs.
2) I had introduced, in the year 2020, the new personal income tax regime with six income slabs starting from Rs.2.5 lakh. I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs.3 lakh. The new tax rates are:
Income in Rs. Tax Rate
0-3 lakh Nil
3-6 lakh 5 per cent
6-9 lakh 10 per cent
9-12 lakh 15 per cent
12-15 lakh 20 per cent
> 15 lakh 30 per cent
The new slab rates are applicable under NEW TAX REGIME only. If you are choosing the OLD Tax regime, then these tax slabs are not applicable for you.
3) My third proposal is for the salaried class and the pensioners including family pensioners, for whom I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs.15.5 lakh or more will thus stand to benefit by Rs.52,500.
If you have opted for NEW TAX REGIME and the salary is above Rs.15.50 lac, then you will get a standard deduction of Rs.52500 from your gross salary.
4) The limit of Rs.3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was Rs.30,000/-pm. In line with the increase in government salaries, I am proposing to increase this limit to Rs.25 lakh.
Tax exemption from leave salary at the time of retirement of a private employee u/s 10(10AA) has been increased from Rs.3 lacs to Rs.25 lacs.
5) We are also making the new income tax regime as the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.
You have to choose and select the option while filing the return in case if you want to opt for OLD regime. Otherwise, return will be filed under NEW regime by default.
PS: We cannot conclude as to which regime is beneficials seeing the charts since taxation under old regime depends on savings and investments.
For your convenience, I have prepared an excel sheet to help you understand which tax regime is beneficial for you.
You can find the link to access the tax calculator below:
This is Really Helpful in Easy filing, Also the Conclusion added is Good one saying which Tax Regimen one should follow
ReplyDeleteThank You
Regards Puneet
Thank you for your valuable feedback. Happy to help you.
ReplyDeleteIf I Choose New Regime, Can i still claim the house loan interest??
ReplyDeleteNo, you cannot claim any deduction or exemption under New regime.
DeleteIt's very easy to understand.
ReplyDeleteThank you for your valuable feedback.
DeleteGood insight and well concluded, thanks Mounica
ReplyDeleteThank you Vaisakh.
Delete