Introduction
As always expectations are higher from the Union Budget of India. Every year, 1st February is considered as the most awaited day for the budget to be announced. Every individual of this nation keeps high faith and expects a good budget to be presented which can provide them with something good.
And honestly, after reading the Budget 2023 Highlights, you will surely be happy and satisfied as there are many relaxations and benefits provided by our Finance Minister Nirmala Sitharaman in the budget 2023. Moreover, it focuses on developing all the regions and citizens, focusing mainly on the youth, women, farmers, OBCs, scheduled castes, and scheduled tribes.
Being the budget a very lengthy and complicated to understand, here is the short summary given relating to the amendments made in Budget 2023 relating to Personal Tax Regime.
So now let us jump directly to the most exciting and awaited Budget 2023 Highlights of Personal Tax Regime.
Direct Tax Highlights of Budget 2023
- Personal Tax Regime
a)As per the Budget Updates, the new tax regime shall be considered as the default regime under Income Tax which was earlier applicable to Individuals and HUFs only. In addition to it, it will be applicable for AOP (other than co-operative), BOI and AJP.
b) There are two exceptional cases of the above budget highlight which states that in the following two cases, the old tax regime will be applicable. So, the two cases are:-
CASE 1 : Where and individual, HUF, AOP (other than co-operative), BOI and AJP is not willing to be taxed under the old tax regime.
CASE 2 : Secondly, where the person is earning income under the head “PGBP” and have opted for old tax regime can revoke the option only once and after that they will continue to be taxed under the new tax regime.
c)The major direct tax highlight of budget 2023 is the new income tax regime with new slab and tax rates.
So, here is the new income tax regime which is the default regime from now on.
NEW TAX REGIME
| Total Income | Rate (per cent) |
| Upto Rs. 3,00,000 | NIL |
| From 3,00,000 to 6,00,000 | 5 |
| From 6,00,000 to 9,00,000 | 10 |
| From 9,00,000 to 12,00,000 | 15 |
| From 12,00,000 to 15,00,000 | 20 |
| Above 15,00,000 | 30 |
d)Budget has benefitted taxpayers as there is an increase in the rebate for the resident individuals under the new tax regime. So, earlier the amount of rebate provided was limited to Rs. 5 Lakh. However, now the rebate amount is increased to Rs. 7 Lakhs which means the resident individuals are not required to pay tax if their income is up to Rs. 7,00,000.
e) In the new tax regime, the earlier provided deductions like standard deduction and deduction from family pension shall continue to remain into existence. Thus, a standard deduction of Rs. 50,000 and a deduction from family pension up to Rs. 15,000 shall be allowed under new regime.
f) The Budget 2023 informs about the highest surcharge of 37% which shall not be applicable in the new income tax regime from now on.
Earlier the rate of surcharge for both the old and new regimes was as follows:-
EARLIER APPLICABLE SURCHARGE
| RATE | INCOME |
| 10% | Income above Rs. 50 Lakh and up to Rs. 1 crore |
| 15% | Income above Rs. 1 crore and up to Rs. 2 crore |
| 25% | Income above 2 crore and up to Rs. 5 crore |
| 37% | Income above R.s 5 crore |
However, now under the new tax regime, the limit of 37% is removed and now the rate of surcharge for the new regime is as follows:-
CURRENT APPLICABLE SURCHARES (for new tax regime)
| RATE | INCOME |
| 10% | Income above Rs. 50 Lakh and up to Rs. 1 crore |
| 15% | Income above Rs. 1 crore and up to Rs. 2 crore |
| 25% | Income above 2 crore and up to Rs. 5 crore |
All in all, after the announcement of the Budget, for individuals, HUF, AOP (other than co-operative), BOI and AJP under the new regime, the surcharge rate would be the same except that the surcharge rate of 37% will not apply. Highest surcharge shall be 25 percent for income above 2 crores This would reduce the maximum rate from about 42.7 percent to about 39 percent. No change in surcharge is proposed for those who opt to be under the old regime.
g) And the last Direct Tax Highlight of Budget 2023 was the proposal made by FM to increase the limit of tax exemption on leave encashment on the retirement of non-government salaried employees from 3 Lakh to 25 Lakh.
Conclusion
This was all about the Budget 2023 highlights of Personal Tax Regime. Stay tuned, to know about the provisions amended for socio-economic welfare measures, ease of compliance and other amendments relating to direct tax.
In the article “Budget 2023 Highlights of Personal Tax Regime” the only importance is given to the personal tax regime as it is the only and prime thing that everyone searches for in the Budget for the year announced.
Hope you enjoyed and happy with the Indian Budget 2023!
Watch Union Budget 2023-24
