New Income Tax Slab Budget 2023 for Government Employees

Union Budget Highlights 2023-24 PDF in English

On February 1, Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24 in Parliament. This document provides a summary of key highlights from her speech, along with explanations and complete analysis. This budget includes the upcoming economic initiatives of the Centre for the new financial year, with a paperless format.

The Union Budget 2023-24 offers considerable relief in terms of personal income tax. According to the new tax regime, resident individuals with a total income of up to ₹7 lakh would not be required to pay any income tax. In addition, salaried individuals would be able to take advantage of the standard deduction of ₹50,000. This new tax regime for individuals and Hindu Undivided Families (HUFs) will be the default rule. Furthermore, the limit for tax exemption on leave encashment upon retirement for non-government salaried employees has been increased to ₹25 lakh.

The personal income tax has revealed five major announcements. The rebate limit in the new tax regime has been increased to ₹7 lakh, meaning those with incomes up to this amount will not pay any taxes. The tax structure has been altered by reducing the number of slabs to five and raising the tax exemption limit to ₹3 lakh, providing relief to all taxpayers under the new regime.

Additionally, the benefit of standard deduction has been extended to salaried employees and pensioners including family pensioners, who will receive ₹50,000 and ₹15,000 respectively. Furthermore, those earning ₹15.5 lakh or more will benefit by a total of ₹52,500. Finally, the highest surcharge rate for personal income tax over ₹2 crore has been reduced from 37% to 25%.

The maximum personal income tax rate has been reduced from 42.74% to 39%. Moreover, the tax exemption limit on leave encashment upon retirement for non-government salaried employees has been increased to ₹25 lakh from ₹3 lakh. The new income tax regime has been set as the default option; however, citizens are still able to benefit from the old tax regime.

The tax exemption for non-government salaried employees upon retirement for the leave encashment has been increased.

The Union Budget Mobile App can be easily downloaded from the official Union Budget web portal (www.indiabudget.gov.in) or from the Android and iOS platforms. The PDF version of Finance Minister Sitharaman’s Budget Speech 2023 is also available for download from the same portal. Furthermore, the entire Budget document is also available for download in PDF format and through the Union Budget Mobile App. This app features a bilingual (English & Hindi) platform and contains all 14 Budget documents.

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitaraman, today made five major announcements regarding personal income tax during the Union Budget 2023-24 presentation in Parliament, with the aim of benefiting the country’s hard-working middle class. These announcements, which pertain to rebate, changes in taxation structure, extension of standard deduction to the new tax regime, reduction of the highest surcharge rate, and extension of tax exemption limit on leave encashment upon retirement of non-government salaried employees, will provide significant benefits to the middle class.

She has proposed an increase in the rebate limit to Rs.7 lakh for persons under the new tax regime, resulting in individuals with an income up to that amount being exempt from taxes. This provides an additional benefit to those already not liable for taxes under the old and new tax regimes, with income up to Rs. 5 lakh.

To further grant relief to the middle class, the tax structure in the new personal income tax regime has been tweaked, featuring a reduction in the number of slabs to five and a rise in the tax exemption limit to Rs. 3 lakh. The following are the new tax rates:

Taxpayers will be greatly relieved in the new regime. An individual with an annual income of Rs. 9 lakh will be required to pay only Rs. 45,000/-, which is only 5% of their income – a reduction of 25% from the current liability of Rs. 60,000/-. Likewise, an individual with an income of Rs. 15 lakh will be obliged to pay Rs. 1.5 lakh, or 10% of their income; this is a decrease of 20% from the existing liability of Rs. 1,87,500/-.

The third budget proposal provides significant relief to salary earners and pensioners, including those who receive family pensions, as the Finance Minister proposed to extend the advantage of standard deduction to the new tax system. Those with an income of Rs. 15.5 lakh or greater will be able to reap the benefits of Rs. 52,500/-. At present, standard deduction of Rs. 50,000/- and deductions from family pension up to Rs. 15,000/- are only allowable within the old regime.

Smt. Nirmala Sitaraman announced the fourth change to personal income tax, reducing the surcharge rate for those making more than Rs. 2 crore from 37% to 25%. This would decrease the maximum tax rate from 42.74% to 39%, which is among the highest in the world. However, those opting to remain in the old regime within this income group will not see a change in surcharge.

In her fifth announcement, the budget proposed extending the limit of tax exemption on leave encashment to Rs. 25 lakh upon retirement for non-government salaried employees, equivalent to the same exemption already granted to government salaried class. Currently, the maximum amount exempt is Rs. 3 lakh.

The proposed budget intends to make the new income tax regime the default option, while allowing citizens to remain eligible to take advantage of the existing tax regime.