Union Budget 2023 Brings Changes to Income Tax Structure
The Union Finance Minister Nirmala Sitharaman announced on Wednesday a hike in the income tax rebate limit from INR 5 lakh to INR 7 lakh and made the new tax regime the default option.
The Minister proposed reducing the number of tax slabs to 5 and raising the tax exemption limit to INR 3 lakh. Personal income tax will now have the following structure:
- Tax-free for income up to INR 3 lakh, 5% for income above INR 3 lakh and up to INR 5 lakh, 10% for income above INR 6 lakh and up to INR 9 lakh, 20% for income above INR 12 lakh and up to INR 15 lakh, and 30% for income above INR 15 lakh.
- Pensioners will also receive the benefit of a standard deduction.
- Salaried individuals earning INR 15.5 lakh or more will benefit by INR 52,500.
- A person earning INR 9 lakh annually will now pay INR 45,000, instead of INR 60,000, and someone earning INR 15 lakh will pay 10% as tax.
- The limit for tax exemption on leave encashment for government employees has been raised from INR 3 lakh to INR 25 lakh.
- The average processing time for income tax returns has been reduced from 93 to 16 days.
However, people still have the option to choose the previous tax regime.