Finance Minister Nirmala Sitharaman announced an increase in the income tax rebate limit from Rs 5 lakh to Rs 7 lakh under the new tax regime. She added that while the new tax regime would be the default, taxpayers could opt for the old one. The FM also reduced the number of tax slabs in the new tax regime. They are as follows: Tax for income of Rs 0-3 lakh is nil; income above Rs 3 lakh and up to Rs 5 lakh to be taxed at 5%; income of above Rs 6 lakh and up to Rs 9 lakh to be taxed at 10%; income above Rs 12 lakh and up to Rs 15 lakh to be taxed at 20%; and income above Rs 15 lakh to be taxed at Rs 30%.
The government has estimated the fiscal deficit for 2023-24 at 5.9 per cent of the GDP, the FM said while presenting Union Budget 2023-24 in Parliament. The FM added that the government remains committed to bringing the fiscal deficit down to 4.5 per cent of the GDP by 2025-26. The capital investment outlay has been increased by 33 per cent to Rs 10 lakh crore, which will account for 3.3 per cent of the GDP. In a boost for states, the FM said that the 50-year interest-free loan to state governments will continue for a year more. The NITI Aayog’s state support mission will be continued for three years, she added
The new income tax slabs under the new tax regime are
Rs 0-3 lakh: Nil
Rs 3-6 lakh: 5 per cent
Rs 6-9 lakh: 10 per cent
Rs 9-12 lakh: 15 per cent
Rs 12-15 lakh: 20 per cent
Over Rs 15 lakh: 30 per cent
The move is aimed at incentivising people to shift to the new tax regime, which has not seen much traction since launch in FY21.
What is the new tax regime?
The lower tax regime (sans exemptions and deductions) for individuals was introduced in 2020 under Section 115BAC as a simpler alternative, without claiming any investment-related deductions or exemptions. This was expected to prove useful for individuals who were not in a position to invest and claim deductions. The new regime had more slabs than the previous one.
However, this regime has not seen many takers so far, as it is considered more complicated.
