In a bid to provide tax relief, the Finance Ministry has introduced a revamped Income Tax Regime with widened upper-level tax slabs and reduced tax rates. The changes were implemented in the budget presented on February 1, 2023, and have altered the income tax slabs under the new tax regime.
Under the new tax regime, the Finance Ministry has increased the limit, setting the maximum exemption at Rs 3 lakh. For every additional Rs 3 lakh income, the subsequent slab rate will be applicable. Notably, the standard deduction has been extended to the optional tax regime, offering further flexibility for taxpayers.
A key feature of the new income tax regime is that individuals with taxable income up to Rs 7 lakh will not have to pay any tax. Considering the reinstatement of the standard deduction of Rs 50,000, individuals with taxable income up to Rs 7.5 lakh can potentially pay zero income tax.
As the financial year concludes, many companies are requesting their employees to submit investment certificates for tax-saving purposes. It is essential for individuals to be aware that the Finance Ministry has made the ‘New Tax Regime’ the default option for salaried taxpayers. Failure to inform the company about the preferred tax regime will result in income tax being levied under the New Tax Regime.
Looking ahead, Finance Minister Nirmala Sitharaman is scheduled to present the interim budget for FY25 to the Narendra Modi government on February 1, 2024. During an election year, the government typically opts for an interim budget, also known as a vote on account, rather than a comprehensive budget presentation.
