Budget 2023 brought a lot of changes, with the main focus on making the new tax regime more attractive. The motive behind these changes was to encourage more and more taxpayers for the adoption of the new tax regime.Due to several amendments as per Budget 2023 there is a lot of confusion among taxpayers regarding the choice between the old and new tax regimes.
The new tax regime was introduced in Union Budget 2020 under which the tax slabs were altered and taxpayers were offered concessional tax rates. But taxpayers who opt for the new tax regime cannot claim several exemptions and deductions. These include HRA, LTA, 80C, 80D and more. In Union Budget 2023, the government introduced crucial changes to encourage taxpayers to adopt the new tax regime.
Streamlined tax slabs in the 2023 changes: The tax exemption limit has been increased to ₹3 lakhs and the new tax slabs are:
Income up to ₹3,00,000- Nil
Income up to 3,00,001- 6,00,000- 5%
Income up to ₹6,00,001- 9,00,000- 10%
Income up to ₹9,00,001- 12,00,000- 15%
Income up to ₹12,00,001- 15,00,000- 20%
Income up to ₹15,00,001 and above- 30%
Whatabouttheoldtaxregime?
The old regime prevailed before the introduction of the new regime under which over 70 exemptions and deductions were available, including HRA and LTA, which can reduce your taxable income and lower tax payments. The most popular and generous deduction is Section 80C that allows for a reduction of taxable income up to Rs.1.5 lakh.