arrow-left

Union Budget 2023-2024 Reaction: Dhaval Kapadia, Director – Managed Portfolios, Morningstar Investment Adviser India

  • 01 Feb, 2023 |
  • 4:40 PM
  • Extending benefits of standard deduction to new tax regime for salaried class and pensioners.

Takeaway - Focus on new tax regime – Budget is clearly trying to drive more tax payers to the new tax regime for which additional benefits have been provided. No changes have been proposed for the old tax regime. In fact, the new tax regime is now the default option for tax payers, although they have the choice to opt for the old tax regime. Given the focus on the new tax regime, it seems unlikely that in the near future, any additional benefits / exemptions will be provided to tax payers opting for the old tax regime.

 

Proposals for the new tax regime:

1>    Income limit for rebate of income tax increased from Rs 5 lacs to Rs 7 lacs. For tax payers in the old tax regime it remains at Rs 5 lacs

2>    Exemption limit increased to Rs 3lacs. Number of slabs reduced from six to five in the new regime.

The new tax rates are:

Rs 0-3 lakh

Nil

Rs 3-6 lakh

5% 

Rs 6-9 lakh

10%

Rs 9-12 lakh

15%

Rs 12-15 lakh

20%

Above Rs 15 lakh

30%

 3>    This will provide major relief to all tax payers in the new regime. An individual with an annual income of Rs 9 lakh will be required to pay only ` 45,000/-. This is only 5% of his or her income. It is a reduction of 25% on what he or she is required to pay now, ie, Rs 60,000/-. Similarly, an individual with an income of Rs 15 lakh would be required to pay only Rs1.5 lakh or 10% of his or her income, a reduction of 20%  from the existing liability of Rs 1,87,500/.

4>    Extending benefits of standard deduction to new tax regime for salaried class and pensioners. Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500.

5>    Highest surcharge rate on income above Rs 5 crore reduced from 37% to 25% under the new tax regime – trying to encourage tax payers in the highest tax slabs to move from old to new tax regime. This would result in reduction of the maximum tax rate from 42.74% to 39%.

Invest wise with Expert advice

mobile icon
  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
ad IconAd Image

Most Read News

Article Image
  • 14 March, 2022 |
  • 7:03 AM

The US Federal committee's meeting will conclude on March 16, 2022.

Most Shared News

No Record Found