Budget 2023 Income Tax Slabs Explained: New tax regime vs Existing new tax regime vs Old tax regime
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Also See: Budget 2023 Live | Budget 2023 Highlights | Income Tax Slabs
So which income tax regime should you opt for? The table below analyses the income tax outgo in the existing regular income tax regime, the current concessional income tax regime, and the new income tax regime announced by FM Sitharaman in Budget 2023:
| Salary income before any deductions / exemptions | Existing regime | Current new regime | Proposed new regime |
| 5,00,000 | – | – | – |
| 5,50,000 | – | 18,200 | – |
| 6,00,000 | – | 23,400 | – |
| 7,00,000 | – | 33,800 | – |
| 7,50,000 | 23,400 | 39,000 | – |
| 10,00,000 | 75,400 | 78,000 | 54,600 |
| 15,00,000 | 2,10,660 | 1,95,000 | 1,45,600 |
| 30,00,000 | 6,78,600 | 6,63,000 | 6,08,400 |
| 70,00,000 | 21,19,260 | 21,02,100 | 20,42,040 |
| 1,50,00,000 | 50,85,990 | 50,68,050 | 50,05,260 |
| 5,00,00,000 | 1,91,78,250 | 1,91,58,750 | 1,90,90,500 |
| 5,50,00,000 | 2,31,56,562 | 2,31,35,190 | 2,10,40,500 |
| 6,00,00,000 | 2,52,93,762 | 2,52,72,390 | 2,29,90,500 |
Assumptions: EY has considered a total of Rs 2,00,000 worth of deductions and exemptions (including standard deduction) for the purpose of above table under the existing tax regime. The above table caters to resident individual below 60 years of age. Now, standard deduction of Rs 50,000 is available by default under the proposed new regime (similar to the existing tax regime).
As is evident from the table above, if you avail tax exemptions of up to Rs 2 lakh including standard deduction, the new income tax slabs under the new income tax regime make more sense to opt for.
According to Surabhi Marwah, Tax Partner at EY India, the changes in the new tax regime are likely to increase its adoption. “Specifically, for people with salary income upto Rs 7.5 lakh as the tax outflow will be NIL considering the increased limit for rebate coupled with the standard deduction,” she tells TOI.
“In general, if an individual (with salary income above Rs 15 lakh) has deductions and exemptions exceeding Rs 425,000 the old tax regime may still be beneficial (for incomes below Rs 5 crore) but the analysis has to be done on a case-to-case basis,” she notes.
What are the new income tax slabs for 2023 to 2024 under new tax regime?
- Up to Rs 3 lakh income there is 0% or NIL tax
- From Rs 3 lakh to Rs 6 lakh the tax rate is 5%
- From Rs 6 lakh to Rs 9 lakh the tax rate is 10%
- From Rs 9 lakh to Rs 12 lakh the tax rate is 15%
- From Rs 12 lakh to Rs 15 lakh the tax rate is 20%
- Above Rs 15 lakh the tax rate is 30%
The new income tax slabs 2023-24 will be applicable for assessment year 2024-25.
Some of the most common deductions that are claimed and are not allowed under the new income tax regime are:
- House Rent Allowance (HRA)
- Interest in housing loan (self occupied)
- Chapter VI-A deductions (80C, 80D, 80E etc.) except u/s 80CCD(2) (i.e. contribution to NPS by employer), interest on savings bank accounts
- Leave travel allowance
- Professional tax
FAQ: New Income Tax slabs 2023 under New Income Tax regime
- Can we switch between old and new tax regime every year?
Any individual, HUF, AOP (other than co-operative), BOI or AJP not willing to be taxed under the new regime can opt to be taxed under the old regime. For those person having income under the head “profit and gains of business or profession” and having opted for old regime can revoke that option only once and after that they will continue to be taxed under the new regime. For those not having income under the head “profit and gains of business or profession”, option for old regime may be exercised in each year. - How much tax will I pay if my salary is Rs 7.5 lakh?
As per the new income tax slabs 2023-24 under the new income tax regime an individual taxpayer will not have to pay any tax for Rs 7.5 lakh income. This is because the rebate limit has been hiked to Rs 7 lakh and with a standard deduction of Rs 50,000 the net income tax outgo is 0. - Is TDS refundable on salary?
Excess TDS deducted on salary during the year can be claimed as a refund in the individual’s personal tax return. - What is the maximum limit for tax exemption?
Rs 3 lakhs is the exemption limit proposed in the new tax regime under the Union Budget 2023. - How much tax do I pay on Rs 10 lakh salary?
Taxes on a salary income of Rs 10 lakhs will be as below:
Under the old tax regime (assuming that you are claiming deduction and exemptions amounting to Rs 2 lakhs) – Rs 75,400
Under the proposed new tax regime- Rs 54,600 - How to calculate income tax for 2023-24?
Taxes on the net taxable income (post deducting the eligible deductions and exemptions) can be computed as per the applicable slab rate provided above. The tax rate will depend on the regime an individual would opt.
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