New Income Tax Slab Rates for FY 2023-24

The 2023-2024 Income Tax Slab underwent significant changes with the implementation of the new income tax regime. The basic exemption threshold has increased to INR 3 lakhs, while the tax rebate for salaried individuals and taxpayers has risen to INR 7 lakhs from its previous limit of INR 5 lakhs. The blog details the income tax slab changes and new rates under the new tax regime of 2023-2024.

New Income Tax Slabs 2023-2024

1. No taxation for those earning up to INR 3 Lakhs annually.
2. A 5% tax applies to those making between INR 3 Lakhs and INR 6 Lakhs annually.
3. Individuals with annual income ranging from INR 6 Lakhs to INR 9 Lakhs are taxed at 10%.
4. The tax rate increases to 15% for those earning between INR 9 Lakhs and INR 12 Lakhs annually.
5. Those making between INR 12 Lakhs and INR 15 Lakhs annually are taxed at 20%.
6. An annual income above INR 15 Lakhs incurs a tax rate of 30%.

Key Announcements of the Live Income Tax Update 

Finance Minister Nirmala Sitharaman unveiled several changes aimed at reducing the income tax burden for the middle-class, salaried taxpayers, individual taxpayers, and senior citizens. Here are the noteworthy highlights of her significant income tax announcements:

1. Default Tax Regime: The new income tax regime will be the default option, but taxpayers have the choice to opt for the old regime.
2. Deductions for Salaried and Senior Citizens: Standard deduction of Rs 50,000 for salaried individuals and deductions from family pension up to Rs 15,000 will be allowed under both the old and new tax regimes.
3. Increased Rebate: The rebate limit under the new tax regime will be increased from Rs 5 lakhs to Rs 7 lakhs, which means no tax liability for those earning up to Rs 7 lakh.
4. Tax Liability Reduction: For those with an income of Rs 15 lakhs, the tax liability will be reduced to 1.5 lakhs.
5. Improved Processing Time: 45% of returns are now processed within 24 hours, and the average processing time has been reduced from 93 days to 16 days.
6. Technology-Based Tax Governance: The government will focus on technology-based tax governance and will roll out a new-generation IT return form.
7. Unified Filing Process: A system of unified filing process will be set up to facilitate agencies to source data from a common portal.
8. Surcharge for High-Income Taxpayers: For those under the new regime, the surcharge rate for high-income taxpayers will range from 10% for those earning over Rs 50 lakh to 25% for those earning over Rs 2 crore. The highest surcharge rate will not exceed 25%.
9. Increased Encashment Limit: The encashment limit of earned leave up to 10 months of average salary at retirement will be increased to Rs 25 lakh.
10. Increased TCS on Foreign Remittances: The TCS rate for foreign remittances has increased from 5% to 20%.
11. Taxation of Insurance Policy Receipts: Receipts from insurance policies (other than ULIP) will be taxed if the aggregate premium payable exceeds Rs 5 lakhs for any of the policy years.
12. Cost of Acquisition/Improvement: The cost of acquisition or improvement will not include interest claimed under section 24 of the Income-tax Act.
13. TDS Deduction on Lottery and Horse Racing: TDS will be deducted on amounts exceeding Rs 10,000 in a financial year for income from lottery, crossword puzzles, horse racing, and gambling or betting of any form.
14. Taxation of Money Received from Non-Resident: Money received from a non-resident without consideration will be considered as income deemed to accrue or arise in India.
15. Taxation of Market Linked Debentures: Capital gains from market linked debentures will be taxed as short-term capital gains.
16. Extension of Scrutiny Assessment: The time limit for completion of scrutiny assessment will be extended to 12 months from the end of the relevant assessment year.

Maximizing Savings: An Overview of the Upgraded Income Tax System

1. No Tax Liability for Income up to Rs 7 lakh: If your total income is within this limit, you are not required to pay any income tax as the rebate limit has been raised to Rs 7 lakh.
2. Tax Savings for Income of Rs 9 Lakh: If your total income is Rs 9 lakh, you can expect to save Rs 15,600 (with cess) on your income tax.
3. Tax Savings for Income of Rs 15 Lakh: If your total income is Rs 15 lakh, you can expect to save Rs 39,000 (with cess) on your income tax.

2023-2024 Income Tax Changes: Common Deductions No Longer Available

• Leave travel allowance
• Chapter VI-A tax deductions (such as 80C, 80D, 80E, etc.) excluding section 80CCD(2) (employer contribution to NPS).
• HRA
• Professional tax
• Interest in housing loan (self occupied)

According to the Budget, “Any individual, HUF, AOP (other than co-operative), BOI or AJP not willing to be taxed under this new regime can opt to be taxed under the old regime. For those person having income under the head “profit and gains of business or profession” and having opted for old regime can revoke that option only once and after that they will continue to be taxed under the new regime. 

For those not having income under the head “profit and gains of business or profession”, option for old regime may be exercised in each year.” Salaried taxpayers opting for the regular income tax regime will have to continue paying income tax as per the tax slabs mentioned below:

1. Tax exemption is granted for individuals earning a maximum of 2,50,000 Rupees.
2. A tax rate of 5% is imposed on earnings between 2,50,001 and 5,00,000 Rupees.
3. For income ranging from 5,00,001 to 10,00,000 Rupees, the tax obligation stands at 20%.
4. Above 10,00,000 Rupees, the tax liability increases to 30%.

Also Read: How to Claim TDS Refund Online?

The Following are the 2022-23 Income Tax Rates Under the New Tax Regime.

1. Tax-free earnings up to INR 2.5 Lakhs annually.
2. Those making between INR 2.5 Lakhs and INR 5 Lakhs annually face a 5% tax rate.
3. Individuals earning between INR 5 Lakhs and INR 7.5 Lakhs annually are taxed at 10%.
4. Annual income between INR 7.5 Lakhs and INR 10 Lakhs incurs a 15% tax rate.
5. 20% tax rate applies to those earning between INR 10 Lakhs and INR 12.5 Lakhs annually.
6. A 25% tax rate for those making between INR 12.5 Lakhs and INR 15 Lakhs annually.
7. Annual income above INR 15 Lakhs is taxed at 30%.