Your Guide to Income Tax Slab 2023-24

Do you know about the new tax regime proposed in the Union Budget 2023? The income tax slab’s most recent modification demonstrates how the financial world is always evolving. A few modifications have been announced for the income tax bracket rates under the new tax framework in the Union Budget 2023. Over time, the old tax system will no longer be available to taxpayers, and the new one will also become the default tax system. In this article, we will discuss Income Tax Slab 2023-24. 

Meaning of Income Tax Slab

The predetermined income thresholds at which various tax rates are imposed on people or entities are known as income tax slabs. The tax rates rise along with an individual’s income. This kind of taxation enables the establishment of a just and progressive tax structure in the nation. The income tax slabs are updated usually around the time of each budget. 

Based on the person’s income, he or she may be subject to a particular tax bracket. To keep the nation’s tax system equitable, the slab system was implemented. The slabs vary whenever a budget announcement is made.

New Income Tax Slab 2023-24

The new Income Tax Slab 2023-24 as per Union Budget 2023 is-

Old Income Tax Slab Regime

The old income tax regime is-

Key Tax Changes under the New Tax Regime for FY 2023-24

The modifications made to the new tax system are listed below:

• The new income tax system takes over as the default tax system. Therefore, income will be taxed at the new tax regime’s slabs and rates unless a person specifically chooses the old tax system.
• Rs. 50,000 is a standard deduction made available to salaried individuals and pensioners.
• Under the new tax regime, family pensioners can also claim a standard deduction of Rs. 15,000.
• Under the new tax regime, the highest surcharge rate, previously 37%, has been lowered to 25%.
• The amount of the tax credit under Section 87A of the Income Tax Act 1961 has been raised from Rs. 5 lakh (tax rebate of Rs. 12,500) to Rs. 7 lakh (tax rebate of Rs. 25,000). In practice, this means that anyone choosing the new tax system and having taxable income up to Rs 7 lakh will not pay any taxes. Previously, this tax rebate was only accessible up to Rs. 5 lakh in taxable income.
• In the new tax system, the basic exemption ceiling was increased from Rs 2.5 lakh to Rs 3 lakh.
• Under the new tax system, there are now only five income tax brackets instead of six.

Exemptions and Deductions under the New Tax Regime

The following list shows the deductions allowed and not allowed. However the new tax regime does not allow many deductions that were available previously-

Deductions allowed-

Deductions not allowed-

• Interest on Housing loans under Section 24
• Standard salary deduction
• House Rent Allowance (HRA)
• Special allowances under Section 10(14)
• Professional tax
• Relocation allowance
• Helper allowance
• Conveyance allowance 
• Children education allowance 

How to Determine Your Income Tax Bracket?

Knowing which tax brackets their income falls into is required to determine the income tax that must be paid in a specific fiscal year. Additionally, it will rely on the income tax policy he selects for a specific fiscal year. Before choosing one, a person evaluates the income tax owed under the two tax regimes.

You must first be aware of the taxable income on which tax is to be computed to understand the income tax rates and slabs that apply to your income. An individual is eligible for tax exemptions (such as the standard deduction, the exemption for holiday allowance, and the house rent allowance exemption) and deductions under sections 80C to 80U as long as the old existing income tax scheme is maintained. The individual arrives at the taxable income from which the income tax is deducted after applying and subtracting the tax exemptions and deductions to which they are entitled.

Final Words

The government’s continuous efforts to simplify the tax code and give assistance to individual taxpayers are reflected in the Income Tax Slab 2023–24. The updated slabs include provisions to encourage saving and investing as well as a reduction in the burden placed on middle and lower-income people. To minimize their tax responsibilities, taxpayers should stay current on the latest tax laws and utilize deductions and exemptions. To maintain compliance with the shifting tax laws and to make wise financial decisions, it is crucial to seek the advice of tax experts and financial counselors.

In case of any query regarding Income Tax Slab 2023-24, a team of expert advisors from Legal Window is here to assist you at every step. Feel free to reach us at admin@legalwindow.in.