new income tax slabs rates: What are new income tax slabs, rates for FY 2023-24? How are these different from old tax slabs, rates?

The Budget 2023 has changed the income tax slabs under the new tax regime. The government has hiked the basic income exemption limit from Rs 2.5 lakh to Rs 3 lakh under the new tax regime. Apart from this, the government has increased the rebate eligibility ceiling through Section 87A under the new tax regime from Rs 5 lakh to Rs 7 lakh taxable income. This effectively means that any individual opting for the new tax regime in FY 2023-24 will pay zero taxes, provided their taxable income does not exceed Rs 7 lakh.

What is the difference between the proposed and existing new tax regime?
According to Finance Minister Nirmala Sitharaman’s Budget 2023 speech, “I had introduced, in the year 2020, the new personal income tax regime with six income slabs starting from Rs 2.5 lakh. I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs 3 lakh.”

The income tax slabs under the new tax regime for FY 2023-24 are as follows:

The differences between the proposed new tax regime for FY 2023-24 and the existing new tax regime (applicable till FY 2022-23) are as follows:

• Basic exemption limit has been hiked to Rs 3 lakh from Rs 2.5 lakh
• The number of income tax slabs has been reduced from 6 to five
• The tax rebate under Section 87A has been hiked to taxable income level of Rs 7 lakh from Rs 5 lakh. The amount of tax rebate has doubled to Rs 25,000 from Rs 12,500
• The highest surcharge rate has been reduced from 37% to 25% under the new tax regime
• Standard deduction of Rs 50,000 has been introduced from FY 2023-24 for salaried individuals and pensioners.

Prior to the announcement, the income tax slabs under the new tax regime were as follows:

How the proposed new income tax regime differs from old tax regime
The government has not made any changes in the old tax regime. It will continue to have three income tax slabs in FY 2023-24 as well. The income tax slabs applicable to an individual under the old tax regime depends on his/her age and residential status.

For individuals below 60 years of age, the basic exemption limit remains at Rs 2.5 lakh under the old tax regime. For senior citizens – aged 60 years and above but below 80 years – the basic exemption limit under the old tax regime is Rs 3 lakh. For super senior citizens – aged 80 years and above – the exemption limit is Rs 5 lakh.

Income tax slabs for individuals below 60 years in old tax regime

Senior citizens have an option to opt for the new tax regime as the basic exemption limit would be the same in both the tax regimes from FY 2023-24. Till FY 2022-23, the basic exemption limit was higher in the old tax regime as compared with the new tax regime.

Income tax slabs for senior citizens between 60 and 80 years in old tax regime

Super senior citizens (aged 80 years and above) will have a higher basic exemption limit of Rs 5 lakh in the old tax regime as compared to Rs 3 lakh in the new tax regime.

Income tax slabs for super senior citizens (80 years and above) in old new tax regime

Surcharge on income tax
The Budget 2023 has also revised the surcharge rate under the new tax regime. The surcharge rate that will be applicable under new tax regime from FY 2023-24 are as follows:

However, no change has been announced in the surcharge rate if an individual opts for the old tax regime in FY 2023-24.

Cess on income tax amount
The cess on the income tax amount continues to remain the same in both the tax regimes. The cess of 4% will be levied on the income tax amount.