Budget 2023: What are the changes in new tax regime? Expert explains - Hindustan Times
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Budget 2023: What are the changes in new tax regime? Expert explains

Feb 03, 2023 11:06 PM IST

Hindustan Times spoke to Abhishek Chandra Shukla, senior chartered accountant, to know his analysis of Budget 2023 regarding personal income tax.

Union finance minister Nirmala Sitharaman said the new tax system will be the default, with the old system remaining an option. Presenting the last full budget of the Narendra Modi government before the 2024 Lok Sabha election, Sitharaman raised the income tax rebate cap under the new tax system from 5 lakh to 7 lakh.

Overall, the Union government has presented a forward-looking, progressive budget, say experts. The rationalised income tax slabs and other rebates will generate higher disposable income for tax-payers, they say. (Sameer Sehgal/HT)
Overall, the Union government has presented a forward-looking, progressive budget, say experts. The rationalised income tax slabs and other rebates will generate higher disposable income for tax-payers, they say. (Sameer Sehgal/HT)

Hindustan Times spoke to Abhishek Chandra Shukla, senior chartered accountant, to know his analysis of Budget 2023 regarding personal income tax.

Shukla said the government has made changes with a lot of emphasis on the new tax system. “Many changes have been made in the income tax slabs in this budget, but the thing to note is that these changes have been made only for the income tax-payers who have opted for the new income tax scheme," he said.

1. Under the new tax system, no tax will be levied on income up to three lakh. On the other hand, those with an annual income of 3 lakh-6 lakh will be taxed at 5 per cent, while those with an annual income of 6 lakh-9 lakh will be taxed at 10 per cent, he said.

ALSO READ: Budget 2023: New tax regime to be default; who will benefit from it?

2. Now, there will be no tax on those earning less than 7 lakh per annum. Those opting for this new tax regime will get benefits as the exemption available under Section 87A of Income Tax will also be included in it. Those with an annual income of 9-12 lakh will be taxed at 15 per cent.

Shukla said those earning up to 15.5 lakh will get a benefit of 52,000.

Those earning 12-15 lakh annually will be taxed at the rate of 20 per cent. On the other hand, those with annual income above 15 lakhs will have to pay up to 30 per cent tax.

3. In the new tax scheme, now a deduction of 50,000 is available as the standard deduction u/s 16, Shukla said.

4. In the new tax scheme, in addition to income tax on income above 50 lakh, a surcharge also has to be paid. Earlier, a 10% surcharge was to be paid on income of 50 lakh to 1 crore and 15% on annual income of 1 crore to 2 crore, which is the same, but on 2 crore to 5 crore, 25% and above 5 crore, which is 37% surcharge. Now, the highest surcharge has been reduced to 25% .

5. The exemption on leave encashment has been increased from 3 lakh to Rs25 lakh, he said.

Tax rate comparative chart

Old Tax RegimeNew Tax Regime (Existing)New Tax Regime (Proposed)
Apply onEvery Individual, HUF, AOP, BOI etc.Only to Individual and HUFEvery Individual, HUF, AOP, BOI etc.

Deductions

80C, 80D, 80TTA etc.Mostly not availableStd. deduction on Salary (Rs. 50000), Deduction on Family Pension and Deduction under Proposed section 80CCH for Contribution in Agniveer Corpus Fund

Total Income

Rate

Total Income

Rate

Total Income

Rate

Slab

02,50,0000%02,50,0000%03,00,0000%
2,50,0015,00,0005%2,50,0015,00,0005%3,00,0016,00,0005%
5,00,00110,00,00020%5,00,0017,50,00010%6,00,0019,00,00010%

More than 10,00,000

30%7,50,00110,00,00015%9,00,00112,00,00015%
10,00,00112,50,00020%12,00,00115,00,00020%
12,50,00115,00,00025%

More than 15,00,000

30%

More than 15,00,000

30%

Surcharge

050,00,0000%050,00,0000%050,00,0000%
5,00,00011,00,00,00010%50,00,0011,00,00,00010%50,00,0011,00,00,00010%
1,00,00,0012,00,00,00015%1,00,00,0012,00,00,00015%1,00,00,0012,00,00,00015%
2,00,00,0015,00,00,00025%2,00,00,0015,00,00,00025%More than 2,00,00,00025%

More than 5,00,00,000

37%

More than 5,00,00,000

37%

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