Union Finance Minister Nirmala Sitharaman presents the Union Budget 2023-24 in the Lok Sabha | Photo: PTI
New Delhi: Union Finance Minister Nirmala Sitharaman on Wednesday announced an increase in the income tax rebate limit from Rs 5 lakh to Rs 7 lakh stating that the new tax regime will now be the default tax regime.
The Finance Minister also proposed to change the tax structure in this regime by reducing the number of tax slabs to 5 and increasing the tax exemption limit to Rs 3 lakh.
On personal income tax, the FM announced that "Tax for income of Rs 0-Rs 3 lakh is nil, for income above Rs 3 lakh and up to Rs 5 lakh will be taxed at 5 per cent, for income of above Rs 6 lakh and up to Rs 9 lakh will be taxed at 10 per cent and for income above Rs 12 lakh and up to Rs 15 lakh to be taxed at 20 per cent and above 15 lakh at Rs 30 per cent."
For pensioners, the finance minister announced extending the benefit of standard deduction to new tax regime. Each salaried person with an income of Rs. 15.5 lakh or more will benefit by Rs. 52,500.
Sitharaman, while presenting the Union Budget in Parliament today said, "A person earning Rs 9 lakh a year will now be paying just Rs 45,000 instead of Rs. 60,000 currently. Similarly, a person earning Rs 15 lakh will now pay only 10 per cent of this as tax."
The finance minister also said: "The limit of Rs 3 lakh for tax exemption on leave encashment on government salaried employees. That was set in 2002 when government salaries were lower and is now being raised to Rs 25 lakh."
She also added, "The new income tax regime will now become the default option, but people will still have the option to go for earlier regime."
The average processing time for income tax returns has been reduced from 93 days to 16 days.