Income tax rebate limit increased to Rs 7 lakh from Rs 5 lakh
1 February, 2023 | Pragati Singh
Union Finance Minister Nirmala Sitharaman announced new tax slabs for the fiscal year.
While the Narendra Modi government presented its final full-fledged Budget before the 2024 general elections, Union Finance Minister Nirmala Sitharaman announced new tax slabs for the fiscal year.
The tax rebate has been doubled from Rs 5 lakh to Rs 7 lakh under the new regime. In the previous Budget, the FM made no changes to income tax slabs. Because the present income slab and tax rates under the normal tax regime have stayed unaltered since fiscal year 2017-18, the salaried class is now anticipating the income tax rebate.
Last month, the Finance Minister defended the new income tax regime, claiming that it had not erased any advantages from the old code’s simplicity. “If indeed there were gains of simplicity (from the old income tax regime), I want to assure they have not been reversed,” Sitharaman said in New Delhi. “For every tax assessee, it has 7, 8, 9, 10 exemptions. And with all that exemptions, the rate 10, 20, 30 per cent continues. It continues even today. We have not removed it. What we have done in the name of simplicity and to avoid harassment… removing harassment was what was aimed at when we brought in faceless tax assessment,” she added.
The government introduced an optional income tax regime in the 2020-21 Budget, under which individuals and Hindu Undivided Families would be taxed at lower rates if they did not take advantage of specified exemptions and deductions, such as house rent allowance, interest on home loan, and investments under Section 80C. Total income up to Rs 2.5 lakh will be tax-free under this scheme.
While total income between Rs 2.5 lakh and Rs 5 lakh is taxed at 5%, total income between Rs 5 lakh and Rs 7.5 lakh is taxed at 10%, total income between Rs 7.5 lakh and Rs 10 lakh is taxed at 15%, total income between Rs 10 lakh and Rs 12.5 lakh is taxed at 20%, total income between Rs 12.5 lakh and total income above Rs 15 lakh is taxed at 30%.