The Union Finance Minister Nirmala Sitharaman announced that income tax rebate limit increased to Rs 7 lakh in new tax regime. The limit will be increased from Rs 5 lakh currently by Rs 2 lakh in an announcement which will bring a loud cheer to taxpayers.
Basic exemption limit is hiked to Rs 3 lakh from Rs 2.5 currently under the new income tax regime
She also reduced the number of slabs to 5, which will be:
Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)
| Income tax slabs under new tax regime | Income tax rates under new tax regime |
| Income between O to Rs 3 lakh | 0 |
| Income between Rs 3 lakh to Rs 6 lakh | 5% |
| Income between Rs 6 lakh to Rs 9 lakh | 10% |
| Income between Rs 9 lakh to Rs 12 lakh | 15% |
| Income between Rs 12 lakh to Rs 15 lakh | 20% |
| Income Above Rs 15 lakh | 30% |
An individual with annual income of Rs 9 lakh will have to pay only Rs 45,000
An individual with income of Rs 15 lakh will have to pay Rs 1.5 lakh tax, down from Rs 1.87 lakh under new tax structure.
However under the new tax regime, the individual will forego 70 deductions and tax exemptions which includes HRA tax exemption, LTA tax exemption, deduction up to Rs 1.5 lakh under section 80C etc.
Further, the new income tax regime becomes default tax regime. However, the individuals will have an option to continue with the old income tax regime.
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