No Income Tax up to 7 Lakh for Salaried Individuals
Union Budget 2023-24, presented by Finance Minister Nirmala Sitharaman, in parliament today, brought a number of changes in the taxation systems if for both the individuals and corporates. According to finance Minister Nirmala Seetharaman, As a result of various exemptions made for individuals and companies, tax revenue of about 38,000 crore – 37,000 crore in direct taxes and ` 1,000 crore in indirect taxes – will be forgone while revenue of about 3,000 crore will be additionally mobilized.
One major change in terms of personal income tax is that slabs for salaried individual will be redesigned. There would now be five tax slabs in which taxes 0-3 lakh – nil; 3-6 lakh – 5 per cent; 6-9 lakh - 10 per cent; 9-12 lakh – 15 per cent; 12-15 lakh – 20 per cent and above 15 lakh- 30 per cent.
The minister explained further saying, “An individual with an annual income of INR 9 lakh will be required to pay only INR 45,000/-. This is only 5 per cent of his or her income. It is a reduction of 25 per cent on what he or she is required to pay now, INR 60,000/-. Similarly, an individual with an income of INR 15 lakh would be required to pay only INR 1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of INR 1,87,500/.
Another big change in the taxation system was in the income tax for individual salaried taxpayers. She mentioned said that the rebate under section 87A of new income regime is hiked to INR 7 lakh. In simple terms, salaried individual have been exempted from income tax in case their annual income is up to INR 7 lakhs.
She added in it the third change, saying, “Each salaried person with an income of 15.5 lakh or more will thus stand to benefit by 52,500.” In the new tax regime, the highest surcharge payable under personal income tax has been cut from 37 per cent to 25 per cent. As a consequence, the effective tax rate on the highest income bracket with income above INR 2 crore, which is presently 42.74 per cent (including all taxes), would be reduced to 39 per cent.
“The limit of INR 3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was INR 30,000/- per month. In line with the increase in government salaries, I am proposing to increase this limit to INR 25 lakh.” added the Finance Minister.
The budget proposed a number of tax benefits focussed on the enterprise side as well. A big change for new enterprises is that if they starting manufacturing activities till 31st March 2024, they would get the benefit of a lower tax rate of 15 per cent.
Companies in the sugar manufacturing will be provided with an opportunity to claim payments made to sugarcane farmers for the period prior to assessment year 2016-17 as expenditure.