New Income Tax 2023: Union Minister Nirmala Sitharaman delivered much-needed respite to the middle class earlier this week. In her Budget 2023 speech, she said that anyone earning up to Rs 7 lakh will not be taxed. But what about individuals with only one rupee more over the tax-free limit? She created a new tax regime in 2020 that allows those who do not seek tax breaks through savings schemes to opt for somewhat lower rates. She introduced another scheme after the new scheme received a chilly reception. Those who opt out of the former tax regime will have to pay no income tax if their earnings are less than Rs 7 lakh. The number of taxpayers in this category is insignificant in comparison to the total tax base. (New Income Tax 2023)
The number of taxpayers in this category is small in comparison to the total tax net; but, due to lower income levels, these persons require the most tax relief. Those who want to take advantage of deductions will have to use the existing income tax system.
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New Income Tax 2023: Know your tax slab
No tax will be levied on salaries between 0 and Rs 3 lakh under the new income tax slabs. 5% on those between Rs 3 and Rs 6 lakhs, 10% between Rs 6 lakh and Rs 9 lakh, 15% between Rs 12 lakh and Rs 15 lakh, and 30% beyond Rs 15 lakh. Those earning up to Rs 7 lakh will not have to pay any taxes after usual deductions.
Those earning Rs 9 lakh per year will pay Rs 45000 in taxes. Those earning Rs 15 lakh will pay Rs 1.87 lakh in tax.
New rebate
Those earning even Re 1 more than the maximum will have to pay a significant amount of tax. Such people will have to pay Rs 25000 per year. The new rebate is known as the 87A benefit. Those earning more than Rs 7,00,001 will not be eligible for the Section 87A benefit.
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If your income is Rs 7 lakh and 1, you will receive a 3 lakh rebate under the new regime. Following that, you must pay 5% tax on the remaining Rs 4 lakh. So a 5% tax on Rs 3 lakh equals Rs 15000. The remaining Rs 1 lakh is subject to a 10% tax, which amounts to Rs 10000. As a result, the total tax will be Rs 25000.
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