Under the new income tax regime in Budget 2023, the basic exemption limit has been increased from Rs.2.5 lakh to Rs.3 lakh. There has been an increase in the income threshold for claiming a rebate under Section 87A; now it is Rs.7 lakh instead of Rs.5 lakh. For instance, an individual with an annual income of Rs.7 lakh will not have to pay any tax if he/she does not have any other taxable income sources.
New Income Tax Slab for F.Y. 2023-24 (A.Y.2024-25) – Updated on 1st Feb 2023
Individuals Male Female Below 60 Years of Age |
|
|---|---|
| Income Range | Tax Rate |
| ➡️ Up to Rs. 2,50,000 | Nil |
| ➡️ Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| ➡️ Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| ➡️ Above Rs. 10,00,000 | 30% |
Surcharge |
|
Senior Citizen |
|
| ➡️ Up to Rs. 3,00,000 | Nil |
| ➡️ Rs. 3,00,001 to Rs. 5,00,000 | 5% |
| ➡️ Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| ➡️ Above Rs. 10,00,000 | 30% |
Super Senior Citizen |
|
| ➡️ Up to Rs.5,00,000 | Nil |
| ➡️ Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| ➡️ Above Rs. 10,00,000 | 30% |
Surcharge |
|
| ✔️ 10% if total income exceeds Rs. 50 lacs, | |
| ✔️ 15% if total income exceeds Rs. 1 Crore but doesn't exceed Rs. 2 Crore, | |
| ✔️ 25% if total income exceeds Rs. 2 Crore but doesn't exceed Rs. 5 Crore | |
| ✔️ 37% if total income exceeds Rs. 5 Crore | |
| ✔️ Short-term capital gains covered under section 111A, long-term capital gains covered under sections 112/112A, as well as dividend income will be subject to a surcharge of a maximum of 15%. | |
Health and Education Cess |
|
| ✔️ Health & Education cess at 4% of Income Tax & Surcharge | |
Rebate U/s 87A |
|
| ✔️ Resident individuals who earn up to Rs. 5,00,000 per annum are entitled to relief of up to Rs. 12,500 under Section 87A. | |
Section 115BAC New Tax Regime |
|
| Special Tax Rates for Individual/HUF/AOP/BOI/AJP Assessees opting for Section 115BAC | |
| ➡️ Up to Rs. 3,00,000 | Nil |
| ➡️ From Rs. 3,00,001 to Rs. 6,00,000 | 5% |
| ➡️ From Rs. 6,00,001 to Rs. 9,00,000 | 10% |
| ➡️ From Rs. 9,00,001 to Rs. 12,00,000 | 15% |
| ➡️ From Rs. 12,00,001 to Rs. 15,00,000 | 20% |
| ➡️ Above Rs. 15,00,000 | 30% |
Surcharge |
|
| 10% if total income exceeds Rs. 50 Lacs | |
| 15% if total income exceeds Rs. 1 Crore but does'nt exceed Rs. 2 Crore, | |
| 25% if total income exceeds Rs. 2 Crore | |
| In case of short term capital gains covered u/s 111A, long term capital gains covered u/ss 112/112A and dividend income, surcharge would be restricted to maximum 15% | |
Health and Education Cess |
|
| Health & Education Cess @4% of Income Tax and Surcharge | |
Rebate U/s 87A |
|
| Relief u/s 87A up to Rs. 25,000 for resident individual having total income of up to Rs. 7,00,000 | |
Income Tax Calculator AY 2024-25 and AY 2023-24
Comparison Before and After Budget 2023 (New Tax Regime)
| Income Range | Before Budget 2023 (New Tax Regime) | After Budget 2023 (New Tax Regime) |
|---|---|---|
| ₹0-₹2,50,000 | Nil | Nil |
| ₹2,50,000 -₹3,00,000 | 5% | Nil |
| ₹3,00,000-₹5,00,000 | 5% | 5% |
| ₹5,00,000-₹6,00,000 | 10% | 5% |
| ₹6,00,000-₹7,50,000 | 10% | 10% |
| ₹7,50,000-₹9,00,000 | 15% | 10% |
| ₹9,00,000-₹10,00,000 | 15% | 15% |
| ₹10,00,000-₹12,00,000 | 20% | 15% |
| ₹12,00,000-₹12,50,000 | 20% | 20% |
| ₹12,50,000-₹15,00,000 | 25% | 20% |
| >₹15,00,000 | 30% | 30% |
Moreover, it becomes the default tax regime under the new income tax regime.
Taxpayers will, however, have the option to continue paying income taxes under the old system.
Currently, 37% of the highest tax rate is surcharged, but that will decrease to 25% under the new tax regime.
Deductions
| Deductions | Old Tax Regime (A.Y. 2023-24 & A.Y. 2024-25) Before and After Budget 2023 | New Tax Regime (A.Y. 2023-24) Before Budget 2023 | New Tax Regime (A.Y.2024-25) After Budget 2023 |
| Rebate u/s 87A | 12500 (Income up to 5 Lakh) | 12500 (Income up to 5 Lakh) | 25000 (Income up to 7 Lakh) |
| Standard Deduction | 50000 | – | 50000 |
| Leave Travel Allowance (LTA) | Yes | No | No |
| House Rent Allowance HRA Exemption | Yes | No | No |
| Food Allowance of Rs. 50/meal with two meals a day plus other allowances | Yes | No | No |
| Perquisites for official purposes | Yes | Yes | Yes |
| Entertainment Allowance | Yes | No | No |
| Professional Tax | Yes | No | No |
| Self-occupied or vacant property Home Loan Interest under section 24b | Yes | No | No |
| Interest on Home Loan for Let-Out Property | Yes | Yes | Yes |
| Deduction 80C (LIC/EPF/ELSS/PPF/FD/Children’s Tuition Fee etc) | Yes | No | No |
| NPS Employee’s Own Contribution | Yes | No | No |
| NPS Employer’s Contribution | Yes | Yes | Yes |
| 80D Medical Insurance | Yes | No | No |
| 80U Disabled Individual | Yes | No | No |
| 80E Interest on Education Loan | Yes | No | No |
| 80EEB Interest on Electric Vehicle Loan | Yes | No | No |
| 80G Donation to Political Party/Trust | Yes | No | No |
| 80TTA and 80TTB Saving Bank Interest | Yes | No | No |
| Other Deduction under Chapter VI-A | Yes | No | No |
| Conveyance Allowance | Yes | Yes | Yes |
| Transport Allowance for a Specially abled person | Yes | Yes | Yes |
| Daily Allowance | Yes | Yes | Yes |
| Exemption on Leave Encashment u/s 10 (10AA) | Yes | Yes | Yes |
| Exemption on Gratuity u/s 10(10) | Yes | Yes | Yes |
| Exemption on Voluntary Retirement 10 (10C) | Yes | Yes | Yes |
| Deduction on Family Pension Income | Yes | Yes | Yes |
| 80CCH – Contribution to Agniveer Corpus Fund | Yes | Did not exist | Yes |
Surcharge
| Income Range | New Rate (2023-24) | Old Rates (2022-23) |
| Rs. 50 Lakhs to Rs.1 Crore | 10% | 10% |
| Rs. 1 Crore to Rs. 2 Crore | 15% | 15% |
| Rs. 2 Crore to Rs. 5 Crore | 25% | 25% |
| Rs. 5 Crore to Rs. 10 Crore | 37% | 37% |
| More than Rs. 10 Crore | 37% | 37% |
Q. Can you tell me what the basic exemption limit is for FY 2023-24 under the new tax regime?
A. From April 1, 2023, the basic income exemption limit will be Rs 3 lakh. The limit has been raised from Rs 2.5 lakh to Rs 3 lakh in Budget 2023.
Q. Does the new tax regime 2023 allow you to claim any deductions?
A. For salaried and pensioners in Budget 2023, a standard deduction of Rs 50,000 will be allowed. This means that you can deduct Rs 50,000 from your taxable income and pay taxes only on the remaining amount. This will help reduce your tax burden and make it easier to manage your finances.
Additionally, they can claim deductions under Section 80CCD (2).