The Finance Ministry has laid out a few imperative changes regarding Personal Income Tax. Let’s find out what it is.
Before talking about this year’s budget let’s recap last year’s budget. There were no major changes regarding Personal Income Tax last year which was totally opposite to the expectations of the middle-class population of India.
But this time, there are a few important points that made the middle class smile.
- Rebate- As of now, people earning less than 5 Lakhs do not pay any direct income tax. In this year’s Union Budget, the Finance Minister- Nirmala Sitharaman has proposed to increase the rebate limit to 7 lakhs in the new tax regime. That means people earning less than 7 Lakhs do not have to pay any direct income tax.
- Tax Slabs- Currently there are 6 income tax slabs starting from 2.5 Lakh as introduced in the year 2020. The Honourable Finance Minister has proposed to change the tax structure in this regime by reducing the number of tax slabs to 5 and increasing the exemption limit to 3 Lakhs. The new tax slabs are as follows:
Income Tax Slab for FY 2023-24
| Income Amount |
Tax Percentage |
| 0-3L |
0% |
| 3-6L |
5% |
| 6-9L |
10% |
| 9-12L |
15% |
| 12-15L |
20% |
| Above 15L |
30% |
The people falling under the bracket of less than 15L will have to pay less than before now. This point was the reason behind the happy faces of the middle class of India.
- Pensions- The Finance Minister has proposed to extend the benefit of the standard deduction. A salaried person with an income of 15.5 Lakh Rupees or more will be benefited from 52,500 Rupees.
- Reduction in the highest tax rate– As of now the highest tax rate for people who earn INR 50 million is 42.744% which consists of a 37% surcharge, The Finance Minister has proposed to decrease the surcharge to 25%. This makes the maximum tax rate reduced to 39%.
- Leave Encashment– In 2002, when the highest salary of a government employee was 30 thousand, the limit of 3L rupees of tax exemption on leave encashment on the retirement of Non-Government salaried employees was set. As the government employee’s salary has increased substantially during these years, The Finance Minister has proposed to increase this limit to 25L rupees
Final Words
Now that you know the changes in the personal income tax, open Demat Account with Angel One and start building a wealth.
