Budget 2023-24 for Salaried Professionals

Personal income tax. 

New Tax Regime for FY 2023-24

 The Union Budget 2023-24, presented by Finance Minister Nirmala Sitharaman on February 1.

High Networth individuals could find new tax regime beneficial, while people in the lower and middle income brackets who claim multiple deductions could still be better off with the older tax regime .

Changes 1 )

New Tax Regime - No tax for Income upto 7  Lakh.

Old Tax Regime - No change , No Tax for Taxable Income upto 5 Lakh

 Resident individual with total income up to 5,00,000 do not pay any tax due to rebate under both old and new regime. It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to  7,00,000.

Change 2)

New Tax Regime - 

Tax slab reduced from Six income slabs  starting from 2.5 lakh  => Five income slabs starting from 3 lakh

 

Change 3)

New Tax Regime -

Standard deduction of 50,000 Rs ==>  Each salaried person with an income of  15.5 Lakh or more will thus stand to benefit by 52,500.  Applied to or the salaried class and the pensioners including family pensioner

Change 4)

New Tax Regime - 

Highest surcharge rate from 37 per cent to 25 per cent .  Maximum tax rate from 42.74 % to 39 %.

Change 5)

Tax exemption on leave encashment on retirement of non-government salaried employee from 3 Lakh to 25 L

Making the new income tax regime as the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.

New Tax Regime for FY 2023-24

 

 Encashment of earned leave up to 10 months of average salary, at the time of retirement in case of an employee (other than an  employee of the Central Government or State Government), is exempt under sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act (“the Act”) to the extent notified. The maximum amount which can be exempted is  3 Lakh at present. It is proposed to issue notification to extend this limit to 25 Lakh.

 

Hence no changes in Old Tax Regime. Smart move by FM .

Source : https://www.indiabudget.gov.in/doc/budget_speech.pdf

Disclaimer : This article is solely for educational purpose and cannot be construed as legal and professional opinion. It is based on the interpretation of the author and are not binding on any tax authority. Author is not responsible for any loss occurred to any person acting or refraining from acting as a result of any material in this article.