The Finance Minister has made important statements regarding income tax, raising hopes for relief for employed individuals across the nation. The personal income tax has seen five important announcements. She began by stating that while under the new tax law, there is no tax on income up to Rs. 5 lahks, this refund will now be made available on income up to Rs. 7 lahks.
Up to the 7 lakh refund level, no tax will be due under the new tax system. The new tax system has been established as the default tax system. The six income tax slabs put into effect in 2020 were reduced to five. The initial exemption from income tax is set at Rs. 3 lahks. In the new tax system, the benefit of the standard deduction will be available.
5 Big Announcements on Income Tax: Income Tax Slab Budget 2023 Announcements
- Individuals with incomes under 5 lakhs are excused from paying any taxes under either the old or new tax systems. However, the rebate cap has been raised to Rs 7 lakh under the new tax system. As a result, those with an income of 7 lakhs will no longer be subject to taxation under the new system.
- In 2020, a new tax system was introduced for the middle class, and instead of having 6 tax slabs, there are now only 5. In addition, the tax exemption threshold was also raised from 2.5 lahks to 3 lahks.
- The standard deduction limit has been enhanced for salaried taxpayers and pensioners, but it will only be available on income up to Rs 15.5 lakh. This is because he will make a profit of Rs. 52,500 on this income. The standard deduction limit will remain at 50,000 on income below this.
- On leave encashment, a statement has been made. The exemption amount for cashing out leave upon a salaried employee's retirement has now been raised to Rs. 25 lakhs. Till now, there was a 3 lakh limit on this exemption.
- The maximum tax rate in the country is 42.74%, down from the previous 37% to 25% under the current tax system. The top tax rate has now been lowered to 39%.