5 things that will change in personal income tax after the 2023 budget
In the last comprehensive budget before Prime Minister Narendra Modi seeks a third term, the government today unveiled a series of measures aimed at appeasing India’s middle class.
Here are 5 personal income tax changes announced today:
Income up to Rs 7 lakh would now be tax exempt from the previous threshold of Rs 5 lakh. With high inflation eating away at people’s incomes, the government’s announcement is a relief for the middle class.
Two years ago, the government introduced a new personal income tax system and taxpayers could choose between the old and the new system. Ms Sitharaman announced today that the new plan unveiled this year will now become the default plan. She added that taxpayers could still claim the old tax structure, which allows for exemptions as the new scheme has no possibility of exemption, although it has a higher tax exemption cap of Rs 7. lakh.
The number of tax brackets has been reduced from six to five. The Center has also increased the tax exemption limit from Rs 2.5 lakh to Rs 3 lakh.
The top personal income tax rate, which currently stands at 42.74%, has been reduced to 39%. “A salaried person with an income of Rs 15.5 lakh or more will therefore benefit from Rs 52,500,” Ms Sitharaman said in her budget speech today.
She also proposed reducing the top surtax to 25% from 37% in the new tax regime.
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