New Revised Income Tax Slabs: Rates for New Tax Regime Announced in Union Budget 2023

The Union Budget of 2023 has brought several changes to the Indian income tax norms. For the fiscal year of 2023-24, taxpayers can look forward to a beneficial tax regime with reduced income slabs from six down to five.

In the recently revised tax slab, exempting average citizens from paying taxes has been made easier- with a raise in basic exemption limit to INR 3 lakh compared to previously at INR 2.5 lakh and an increase in rebate under Section 87A for those earning up to a taxable income of INR 7 lakh per annum! This new tax regime tries to strike a balance between taxpayers and the government, providing tax relief, while at the same time, contributing towards the country’s development.

That is, those who select the revised income tax slab for FY 2023-24 and have a yearly salary of no more than INR 7 lakh will not be subjected to any taxes whatsoever! Moreover, this freshly designed tax system is set as the default choice, although citizens are given leeway to remain with their already planned payment procedure. In a major win for taxpayers, the government has slashed the highest rate surcharge from 37% to an impressive 25%, breathing life into the new tax regime.

What is an Income Tax Slab?

The income tax slab is a set of income brackets for which income tax needs to be paid in India. Each income level within the bracket has its own income tax rate, which the taxpayer must pay based on their income in that financial year. This system ensures that those with a higher income are taxed at a higher rate. Individuals who fall into one income bracket are subject to paying only the amount applicable to them, while those who exceed it will have to pay more income tax according to the rates applicable to their respective income levels. The Income Tax Act determines these slabs every year. For FY 2023-24, five new income tax slabs were introduced with reduced rates and enhanced basic exemption limits, which will help taxpayers save on taxes!

Revised Income Tax Slab FY 2023-24 Under New Tax Regime

No matter what age you are, everyone is subject to the same tax slabs under this new income tax regime – no longer will individuals be distinguished from one another by their age. The old-fashioned system of taxation has been replaced with a more equitable and fairer alternative!

The revised income divisions have drastically reduced the total tax expenses for middle-income earners, providing much-needed financial relief. The income tax changes have been created to make life easier for everyone and encourage more people to come forward and pay taxes.

As the new regime tax slab takes effect, taxpayers will be able to save money on their income tax bills with the help of these revised slabs. With the government’s initiative towards simplifying income taxation, India’s taxpayers can now look forward to a simpler and more efficient income tax system.

Factors to Keep in Mind before Opting for New Income Tax Slab

There are numerous factors that need to be taken into consideration when it comes to Indian income tax slabs.

1. If you have income from sources other than salary income, then income from these sources needs to be considered while calculating the total income, based on which income tax slab can be decided.
2. Taxpayers must determine whether they will gain more benefits by choosing the old regime or the new one before making a decision.
3. Any deductions available under Chapter VI-A, such as HRA and Standard Deduction, should also be taken into account.
4. Moreover, taxpayers should always review their income and taxes paid at the end of each financial year and pay any outstanding dues promptly to avoid any penalties and notices.
5. If you, as an individual or a member of a Hindu Undivided Family (HUF), do not have any business income for the given year, then this option can be exercised on or before its due date.
6. Finally, as a taxpayer, you have the choice to pick either of the two tax regimes. However, once you’ve chosen your preferred option and submitted it for processing, you cannot revert back or make any changes until the end of that financial year. If you choose to revoke your decision for the subsequent tax regime and revert back to the previous one, it is possible for you to select the new tax slab again during this financial year.

How the Income Tax will be Calculated for FY 2023-24 Under the New Regime?

To better understand the new income tax slab 2023 calculation, let’s take an example of an individual earning income of Rs.12 Lakhs, which falls in the income tax slab of Rs.9 lakh to Rs.12 lakh. The income tax payable by the individual will be calculated as follows:

Major Highlights of India’s Income Tax Announcement

• Introduce a state-of-the-art IT return form to ensure maximum efficiency.
• The presumptive taxation turnover limit has been raised to 75 lakhs for professionals, with a cash receipt limit of no more than 5 percent.
• Place precedence on technology-based tax governance for maximum efficiency and efficacy.
• The finance minister proudly announced that the amount of time taken to process returns has drastically decreased from 93 days down to a mere 16.
• 45% of filed returns are processed within 24 hours.
• For those earning 15 lakhs, their tax responsibility is a mere 1.5 lakhs – an incredible bargain!

Conclusion

The new income tax slab announced in Union Budget 2023 has further simplified income tax deduction and improved the ease of filing income tax returns. Individuals can now save more on taxes thanks to this income tax new regime’s lower income tax rates, increased basic exemption limits, and a variety of other benefits. To ensure maximum efficiency and accuracy, taxpayers should thoroughly review their income sources before opting for a particular income tax slab for FY 2023-24.