In a big relief for the country’s growing middle class, the government readjusted the income tax rates in the new tax regime and said there will be no income tax up to $7 lakh per year – above $5 lakhs.
In her Budget 2023 speech, Union Finance Minister Nirmala Sitharaman said the government proposes to make the new tax structure a default tax option.
However, no changes have been made to the old tax regime. The income tax slabs are modified in the new tax regime.
The government has also proposed lowering the top surcharge rate from 37 percent to 25 percent in the new tax regime, the FM said.
News in the new income tax regime
– The basic exemption limit is raised to $3 lakhs of $2.5 currently under the new income tax regime in the 2023-24 Budget.
– Reimbursement under Section 87A has been increased from $5 lakhs to $7 lakhs
– There will now be five income tax slabs, on taxable income calculated after all exemptions:
a. taxable income from $0-3 lakh (after all exemptions) will be zero;
b. $3 lakh to 6 lakh will be taxed at 5 percent;
C. Income above $6 lakhs and up $9 lakh, will be taxed at 10 percent;
d. On $12 lakh, up to 15 lakh, will attract a 20 percent tax; Y
me. income above $15 lakh a year will be taxed at 30 percent.
The FM has also proposed increasing the tax exemption on retirement leave charges for salaried non-government employees to $25 lakhs of $3 lakhs.
Expansion proposal $50,000 standard deduction for employees under the new tax regime, reported the FM.
Parliamentary Affairs Minister Pralhad Joshi had previously said: “This will be the best budget. It will be a pro-poor and pro-middle class budget.”
Meanwhile, the Modi government has lowered the fiscal deficit target to 5.9% of GDP in the next fiscal year, compared with 6.4% in the current fiscal year.
Stocks rise on personal tax hike
Stocks rose on Wednesday after the government raised the tax refund floor and increased spending, while bond yields fell after gross borrowing for the next fiscal year in the Union budget increased.
The Nifty 50 Index rose 1.5% to 17,922.50, while the S&P BSE Sensex gained 1.6% to 60,528 as of 12:32 p.m. IST.
Banks and finance were the top gainers among the top 13 sectors, up 1.5% and 1.6%, respectively.
This is the last budget for the full year before the 2024 national election and key statewide elections later this year.