Income Tax News: India has a progressive tax structure, meaning that as income levels rise, so do the tax rates. The relevant tax rates for various income groups in India are determined by the income tax slabs. A number of variables, including age, taxpayer type, income level, and residential status, affect how applicable certain slabs are.
Government Revisions to Income Tax Slabs
Every financial year, the government may make changes to the income tax slabs and provisions. Consult a tax professional and refer to the established tax recommendations. Depending on the income level, there could be surcharges that apply in addition to the income tax rates. In addition, there is a health and education cess on the entire amount owed.
Income Tax Slab Rate for New Tax Regime
| Range of Income | Tax Rate |
|---|---|
| Upto 3,00,000 | Nil |
| 3,00,000-6,00,000 | 5% |
| 6,00,000-9,00,000 | 10% |
| 9,00,000-12,00,000 | 15% |
| 12,00,000-15,00,000 | 20% |
| Above 15,00,000 | 30% |
Unveiling the New Tax System
On April 1, 2020, the new tax system was implemented as part of Budget 2020. Higher incomes are subject to lower tax rates under the new tax system than under the previous one. It is voluntary and, under some circumstances, lowers your tax liability.
Therefore, the majority of the deductions and exemptions allowed by the Income Tax Act of 1961 would not apply to you if you decide to compute your taxes using the new tax system. Nonetheless, in order to make the new tax system more alluring, the government provided the following significant modifications in the budget 2023:
- The default setting will be the new income tax scheme. The base exemption level was increased from Rs 2.5 lakh to Rs 3 lakh in order to enhance the appeal of the new tax system. Additionally, income beyond Rs 15 lakh will be subject to the maximum tax rate of 30%.
- The rebate under Section 87A for taxable income up to Rs. 7 lakhs under the new tax regime has been increased to Rs. 25000 in the budget 2023–24 announcement.
- It has been shared that the standard deduction will be included in the new tax system. Pensioners, including family pensioners, will receive a standard deduction of Rs. 50,000/-as per this salaried class.
- The new tax regime also includes an exemption of Rs. 15,000 for a family pension.
- Reduction of the 37% surcharge to 25% under the new regime for annual income exceeding Rs 5 crore. With the current maximum tax rate of 42.74%, the maximum tax rate would drop to 39% with this reduction.
- For non-government salaried personnel, the Rs. 3 lakh threshold for tax exemption on leave encashment has been increased to Rs. 25 lakh.
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