Good news for taxpayers! Income up to 7 lakh tax free in the new tax regime

Income Tax Slab 2023 New Announcements 2023: The country’s budget has been presented. Finance Minister Nirmala Sitharaman presented the country’s Union Budget in the Parliament today, February 1, 2023. 

There were hopes of relief to the employed people across the country regarding income tax and the Finance Minister has made big announcements regarding income tax. There have been 5 big announcements in personal income tax. First of all, he said that in the new tax regime, there is no tax on income up to 5 lakhs, but now this rebate will be available on income up to 7 lakhs.

That is, in the new tax regime, no tax will have to be paid up to the rebate limit of 7 lakhs. The new tax regime has been made the default tax regime. The 6 income tax slabs implemented in 2020 were changed to 5. Income tax basic exemption will be Rs 3 lakh. Now the benefit of standard deduction will be available in the new tax regime.

Income Tax New Tax slab: What will be the new tax slab?

revenue                tax %

0 to 3 lakh 0%
3 to 6 lakh 5%
6 to 9 lakh 10%
9 to 12 lakh 15%
12 to 15 lakh 20%
More than 15 lakh 30%

Income Tax Slab Budget 2023 Announcements: 5 big announcements on income tax

1. In the old and new tax regime, those with income up to 5 lakh do not pay any kind of tax. But the limit of rebate is being increased to Rs 7 lakh in the new tax regime. That is, in the new tax regime, those with an income of 7 lakhs will no longer have to pay any tax.

2. A new tax regime was brought in 2020 for the middle class, which had 6 tax slabs, it is being reduced to 5. And the tax exemption limit has been increased from 2.5 lakh to 3 lakh.

3. Standard deduction limit has been increased for salaried taxpayers and pensioners, but it will be applicable on income of Rs 15.5 lakh. On this much income, he will get a profit of Rs.52,500. The limit of standard deduction on income below this will remain 50,000 only.

4. The new tax regime will be the default tax regime, but you will have the option of the old tax regime.

5. Announcement has been made on leave encashment. Now the exemption limit has been increased to 25 lakhs for encashing leave on retirement of a salaried employee. Till now this exemption was available on the limit up to 3 lakhs.

6. The maximum tax rate in the country is 42.74%, which has been reduced from 37% to 25% in the new tax regime. Now the maximum tax rate will be reduced to 39%.

Income Tax New Regime Tax Slab: What was the tax slab in the new regime now?

Income Tax Slab Tax Rate

Nil up to 2.5 lakh

Between 2.50 lacs to 5 lacs 5% of the total income which is more than 2.5 lacs

Between 5 lakh to 7.50 lakh 10% of total income which is more than 5 lakh + Rs 12,500

Between 7.50 lakh to 10 lakh 15% of total income which is more than 7.5 lakh + Rs 37,500

Between Rs 10 lakh to Rs 12.50 lakh 20% of total income which is more than Rs 10 lakh + Rs 75,000

Between 12.50 lacs to 15 lacs 25% of total income which is more than 12.5 lacs + Rs 1,25,000

Above 15 lakhs 30% of total income which is more than 15 lakhs + Rs 1,87,500