Budget-2023 (Budget 2023) was presented in the Parliament on Wednesday i.e. 1 February. Finance Minister Nirmala Sitharaman announced what the people of the country were most waiting for in this budget of the Narendra Modi government. The government has increased the income tax exemption limit from Rs 5 lakh to Rs 7 lakh under the New Tax Regime. That is, there will be no tax on the annual income of seven lakhs, but if your income exceeds even one rupee from this limit, then the whole game will get spoiled.
Tax exemption increased from 5 to 7 lakhs
While presenting its last full budget before the upcoming 2024 Lok Sabha elections, the present government has given a big gift to the taxpayers. Presenting the fifth consecutive budget of her tenure as Finance Minister, Nirmala Sitharaman announced to increase the tax exemption limit. Under this, the income tax exemption limit was increased from 5 lakh to 7 lakh. This benefit has been given in the new tax regime only. Standard Deduction has also been included in the new tax regime. But for this the income should be at least Rs 15.50 lakh. In this, the surcharge has been reduced from 37 percent to 25 percent.
According to the announcement of the government, if a person’s annual income is up to Rs 7 lakh, then no tax will have to be paid. At the same time, tax will be deducted on the income more than this according to the new rates. As per the new system, a person with an annual income of Rs 15 lakh will have to pay tax of Rs 1.5 lakh, which was earlier Rs 1.87 lakh.
This is how tax will be deducted on income above 7 lakhs
In Budget-2023, the wait of about 8 years of taxpayers is over. It was already expected that the government could make a big announcement regarding tax in this budget. The Finance Minister said that in the new tax regime, no tax will have to be paid on income up to Rs 7 lakh. But if your annual income is more than Re 1 or say Rs 7,00,001, then you will have to pay tax as per the prescribed rates.
Understand the whole math of deduction like this
According to the new tax slabs introduced in Budget 2023-24, 0% on annual income of 0 to 3 lakhs, 5% on income of 3 to 6 lakhs, 10% on income of 6 to 9 lakhs, 9 to 12 lakhs But tax will have to be paid at the rate of 15 per cent, 20 per cent on income of Rs 12 to 15 lakh and 30 per cent on income above Rs 15 lakh. According to this, the income of seven lakh one rupees will come under two tax slabs.
In simple terms, there will be no tax on income up to Rs 3 lakh. But full tax will have to be paid on an income of Rs 7 lakh. Out of the remaining Rs 4 lakh one, Rs 3 lakh will be taxed at the rate of 5 per cent, which works out to Rs 15,000. After this, tax at the rate of 10 percent will be applicable on the remaining one lakh rupees, which is Rs 10,000. In this way, an income of Rs 700001 can spoil your game and a total tax of Rs 25000 may have to be paid on it.
The new tax slab introduced in the budget 2023-24 is-
0 to 3 lakh at 0 percent
5 percent on 3 to 6 lakhs
10 percent on 6 to 9 lakhs
15 percent on 9 to 12 lakhs
20 percent on 12 to 15 lakhs
30 percent on more than 15 lakhs