In order to reduce the tax burden on the taxpayers of the country, the government is bringing new tax slabs in this budget, which will provide huge tax relief. Let us know what are the new tax slabs
Finance Minister Nirmala Sitharaman will present the Union Budget 2023 in the Lok Sabha on February 1. An increase in the tax exemption limit is expected in this budget. But, before the budget is presented in the lower house of the parliament, we all should know about the existing tax slabs and tax rates under the new-old system. In the current slab of tax, people earning up to Rs 2.5 lakh annually have been exempted from income tax. At the same time, under the new tax regime, under Section 87A of the Income Tax Act, the possibility of increasing the tax exemption limit up to Rs 5 lakh is being expressed. Come, let us know about the current income tax rates and slabs under the new and old tax regime…
What is new and old tax system
Old tax system: At present, two systems of income tax payment have been prescribed in the country. The income tax payer can adopt any one of these arrangements. Under the old system, income tax exemption of up to Rs 2.5 lakh has been given. Apart from this, deduction can be claimed under section 80C, 80D, 80CCD etc. to reduce the taxable income.
New tax system: The new income tax system was introduced in the budget 2021-22. Under the new tax regime, no income tax is levied on annual income up to Rs 5 lakh without any deduction. However, if the annual income exceeds Rs.5 lakhs, then income tax is levied on Rs.3 lakhs out of the annual income of Rs.5 lakhs. Here it is important to tell you that there is a provision of exemption under the new and old tax regime on income up to Rs 2.5 lakh annually. However, no deduction can be claimed under the new regime.
Exemption limit may increase under 80C
Now it is expected from the Union Budget 2023 to be presented on February 1 that the government can provide relief to individual taxpayers by increasing the tax exemption or exemption limit. In the Union Budget 2023-23, there is also a demand to increase the limit of deduction under Section 80C from Rs 1.5 lakh at present. Experts say that the common man is expected to benefit from Budget 2023. With the rising prices of goods and services, it is expected that the Finance Minister will find a way to provide relief to the small tax payers. This can be done by increasing the standard deduction or by increasing the section 80C limit under the Income Tax Act, 1961.
Tax rates under the old regime
- Income up to Rs 2,50,000 per annum tax -free
- 5% tax on annual income up to Rs 2,50,000-5,00,000
- 20% tax on annual income up to Rs 5,00,000-7,50,000
- 20% tax on annual income up to Rs 7,50,000-10,00,000
- 30% tax on annual income up to Rs 10,00,000-12,50,000
- 30% tax on annual income up to Rs 12,50,000-15,00,000
- 30% tax on annual income above Rs 15,00,000
Under the new system, tax rates
- up to Rs 2,50,000 per annum are tax -free.
- 5% tax on annual income up to Rs 2,50,000-5,00,000
- 10% tax on annual income up to Rs 5,00,000-7,50,000
- 15% tax on annual income up to Rs 7,50,000-10,00,000
- 20% tax on annual income up to Rs 10,00,000-12,50,000
- 25% tax on annual income up to Rs 12,50,000-15,00,000
- 30% tax on annual income above Rs 15,00,000
