New Tax Regime: Annual income up to Rs 7 lakh is tax free for those opting for the new tax regime. But earning more than seven lakh rupees one rupee can be heavy for them.
The deadline for filing Income Tax Return (ITR) for the assessment year 2023-24 is 31 July 2023. Taxpayers have two options for filing income tax returns in the country – Old Tax Regime and New Tax Regime.
Taxpayers can choose either of the two options as per their convenience. During the Budget 2023, making a major change in the new tax regime, the government had announced to make the amount up to seven lakh rupees tax-free. But if the earning is more than seven lakh rupees, then tax will have to be paid according to the new rates.
Slabs of new tax regime
If a person’s annual income is up to seven lakh rupees, then no tax will have to be paid. On the other hand, on earning more than this, tax will have to be paid according to the new rates. According to the slab of the new tax regime, 0% on annual income of 0 to 3 lakhs, 5% on income of 3 to 6 lakhs, 10% on income of 6 to 9 lakhs, 15% on income of 12 lakhs, 12 to 15 Income up to Rs 1 lakh will be taxed at the rate of 20 per cent and income above Rs 15 lakh at the rate of 30 per cent. According to this, the annual income of seven lakh rupees will come under the ambit of tax.
25 thousand will have to be given for one rupee
Let us understand how an income of more than seven lakh rupees will spoil the game of any taxpayer. Under the new tax regime, there will be no tax on income up to Rs 3 lakh. Out of the remaining Rs 4 lakh one, the income of Rs 3 lakh will be taxed at the rate of five per cent, which will be Rs 15,000. After this, the remaining one lakh rupees will be taxed at the rate of 10 percent, which is Rs 10,000. In this way, an income of Rs 7,00,001 can spoil your game and you may have to pay a total tax of Rs 25,000.
How will one rupee be heavy?
- Suppose your annual income is seven lakh one rupees. In such a situation, there is no provision for any kind of tax on the income of three lakh rupees. That’s why out of seven lakh, three lakh will be tax free. (7,00,000-3,00,000=4,00,000).
- Now the amount of Rs 4 lakh will be taxable. But this amount will come under the ambit of two tax slabs. Rs 3 lakh will be taxed at 5 per cent. (3,00,000%5= 15,000).
- The remaining amount of one lakh rupees will come under the purview of 10 percent tax slab. 1,00,000%10=Rs 10,000. In this way (15,000+10,000=25,000) you will have to pay a total amount of Rs 25,000 as tax.
- The government has said that if your annual income is more than seven lakh rupees, then you will automatically enter the new tax regime. If someone does not want to shift in it, then he will have to fill the form.
