Budget 2023: New Income Tax regime standard deduction - check amount

New Income Tax regime standard deduction: Finance Minister Nirmala Sitharaman on Wednesday allowed a Rs 50,000 standard deduction to taxpayers under the new regime. Besides, she also tweaked the slabs and hiked the rebate to Rs 7 lakh from Rs 5 lakh.

In the new tax regime, assessees cannot claim deductions or exemptions on their investments.

She tweaked the concessional tax regime, which was originally introduced in 2020-21, by hiking the tax exemption limit by Rs 50,000 to Rs 3 lakh and reducing the number of slabs to five. In the Budget for 2023-24, Sitharaman said currently individuals with a total income of up to Rs 5 lakh do not pay any tax due to rebate under both the old and new regimes.

"It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to Rs 7 lakh," Sitharaman said.

The limit of ₹3 lakhs for tax exemption on Leave Encashment limit raised to ₹ 25 lakhs

We are also making the new income tax regime the default tax regime however, citizens will continue to have the option to avail the benefits of the old tax regime #AmritKaalBudget pic.twitter.com/cnRJNUdCAv

— PIB India (@PIB_India) February 1, 2023

She further said under the new personal income tax regime, the number of slabs would be reduced to five.

"I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs 3 lakh," Sitharaman said.

Under the revamped concessional tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5 per cent; Rs 6-9 lakh at 10 per cent, Rs 9-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent.

"I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500," Sitharaman said.

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