The Union Budget 2023 presented by Finance Minister Nirmala Sitharaman has proposed a new income tax regime with revised tax slabs and rates.
Personal Income tax for new income tax regime:
- Income Tax Slab changed only for New Tax regime and not for Old Tax Regime. So there is no change in Old Tax Regime in any slab / rates.
- Basic Income Tax exemption limit has been increased to Rs. 3,00,000/- from 2,50,000/- under the new income tax regime.
- A rebate u/s 87A has been enhanced under the new tax regime from the current income level of Rs 5,00,000/- to Rs 7,00,000/-, which means an individual’s opting for the new income tax regime and having an income upto Rs. 7,00,000 will not pay any income tax.
- Further, the new income tax regime becomes the default tax regime. However, the individuals will have an option to continue with the old income tax regime. According to the income tax laws, a salaried person can opt for the new tax regime as per their convenience in every financial year. In case an individual has a business income, they cannot choose the tax regime as per their convenience every year. If they opt for the new tax regime, they can switch back to the old tax regime only once in their life.
- The government has reduced the surcharge of the highest rate from 37% currently to 25% in new tax regime.
Under the new tax regime, the individual will forego 70 deductions and tax exemptions, which includes HRA tax exemption, LTA tax exemption, deduction up to Rs.1,50,000 u/s 80C etc.
Income Tax Slab/Rates :
| New Tax Regime (As proposed in Union Budget 2023) | New Tax Regime (Existing) | Old Tax Regime | |||
| Income (In INR) | Tax Rate (%) | Income (In INR) | Tax Rate (%) | Income (In INR) | Tax Rate (%) |
| 0-3 Lakh | 0 | 0-2.5 Lakh | 0 | 0-2.5 Lakh | 0 |
| 3-6 Lakh | 5 % | 2.5 – 5 Lakh | 5 % | 2.5 – 5 Lakh | 5 % |
| 6-9 Lakh | 10% | 5-7.5 Lakh | 10% | 5 – 10 Lakh | 20% |
| 9-12 Lakh | 15% | 7.5 – 10 Lakh | 15% | Above 10 Lakh | 30% |
| 12-15 Lakh | 20% | 10-12.5 Lakh | 20% | ||
| Above 15 Lakh | 30% | 12.5-15 Lakh | 25% | ||
| Above 15 Lakh | 30% | ||||
Scenario 1 : If Individual (age less than 60 years) having Total Income of Rs. 16,00,000 along with Interest payment on Home Loan Rs. 2,00,000, 80C viz LIP Rs. 1,50,000 and 80D Medical Insurance Rs. 25,000.
- Income Tax on Total Income under New Tax Regime (As proposed in Union Budget 2023) : Rs. 1,87,200
- Income Tax on Total Income under New Tax Regime ( Existing) : Rs. 2,26,200
- Income Tax on Total Income under Old Tax Regime : Rs. 1,87,200
Saving of Income Tax as per New Tax Regime proposed in Union Budget: Rs. 39,000
Scenario 2 : If Individual (age less than 60 years) having Total Income of Rs. 30,00,000 along with Interest payment on Home Loan Rs. 2,00,000, 80C viz LIP Rs. 1,50,000 and 80D Medical Insurance Rs. 25,000.
- Income Tax on Total Income under New Tax Regime (As proposed in Union Budget 2023) : Rs. 6,24,000
- Income Tax on Total Income under New Tax Regime (Existing): Rs. 6,63,000
- Income Tax on Total Income under Old Tax Regime: Rs. 6,24000
Saving of Income Tax as per New Tax Regime proposed in Union Budget: Rs. 39,000
Scenario 3 : If Individual (age less than 60 years) having Total Income of Rs. 45,00,000 along with Interest payment on Home Loan Rs. 2,00,000, 80C viz LIP Rs. 1,50,000 and 80D Medical Insurance Rs. 25,000.
- Income Tax on Total Income under New Tax Regime (As proposed in Union Budget 2023): 10,92,000
- Income Tax on Total Income under New Tax Regime ( Existing): Rs. 11,31,000
- Income Tax on Total Income under Old Tax Regime : Rs. 10,92,000
Saving of Income Tax as per New Tax Regime proposed in Union Budget: Rs. 39,000
Complied by CA Bhadresh Shah, Partner – Bhadresh S. Shah & Co.