Union Budget 2023: Five Major Changes to the Personal Income Tax Regime

In a major announcement on income tax changes, the government has revealed five significant changes to the personal income tax regime, aimed at benefiting the hard-working middle class.

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In detail:

• Increase in rebate limit from 5 lakhs to 7 lakhs.

• Reduction in the number of slabs from 6 to 5 with an increased tax exemption limit to 3 lakhs.

Tax rate structure: 0-3 lakhs – Nil, 3-6 lakhs – 5%, 6-9 lakhs – 10%, 9-12 lakhs – 15%, 12-15 lakhs – 20%, above 15 lakhs – 30%

• Standard deduction benefits for the salaried class and pensioners.

• Reduction in the maximum surcharge rate from 37% to 25%.

• Increase in tax exemption on leave and cash payment for non-government salaried employees from 3 lakhs to 25 lakhs.

• New tax regime to become default, but option to opt for old tax regime.

• Resulting in a revenue loss of 35,000 crores with 37,000 crores in direct taxes and 1000 crores in indirect taxes being foregone, and 3000 crores mobilized.