Union Budget 2023 : FM Announces Increase Of Rebate Limit; No Income Tax For Persons With Income Upto Rs 7 Lakhs In New Regime

In a major budget announcement helping the salaried middle class, Union Finance Minister Nirmala Sitharaman announced the proposal to raise the income tax rebate level to Rs 7 lakhs per annum from Rs 5 lakhs per annum.

"Currently, those with income upto 5 lakhs do not pay any income tax in both old and new regimes. I propose to increase the rebate limit to 7 lakhs in the new tax regime", Sitharaman said in the Parliament during her budget speech. Her announcement was welcomed by the members with a loud applause.

"I propose to increase the rebate limit to Rs 7 lakhs in the new tax regime. Thus, persons in the new tax regime with income upto 7 lakhs (per annum) will not have to pay any tax at all", the Minister announced.

The Minister also announced new tax rates as :

0-3L: nil

3-6L: 5%

6-9L: 10%

9-12L: 15%

12-15L: 20%

above 15L: 30%

"This will provide major relief to all tax payers in the new regime. An individual with an annual income of Rs 9 lakhs will be required to pay only 45,000 rupees, this is only 5% of his or her income. It is a reduction of 25% of what he or she is required to pay now, that is 60,000. So in the place of 60,000 it is only 45,000. Similarly, an individual with an income of Rs 15 lakhs would be required to pay only 1.5 lakh or 10% of his or her income- a reduction of 20% from the existing liability of 1,87 500 rupees", the Minster said.

The new income tax system will take over as the standard system. But if someone wants to stick with the old one, they can still benefit from it.

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