New income tax slabs FY23-24: No tax if income is up to Rs 7.5 lakh but 10% tax rate for income between Rs 6 and 9 lakh, explained
ET Online|
1/6
Budget 2023: What taxpayers must know
From tweaking the number of slabs to increasing the rebate, the Budget 2023 has proposed a host of changes in the new income tax regime. While announcing Budget 2023, Finance Minister Nirmala Sitharaman said, "The government proposes to increase the income tax rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime."
Getty Images
2/6
Budget 2023 tweaked the new income tax slabs
Budget 2023 has further tweaked the tax slabs under the new income tax regime. There will not be any tax for income of up to Rs 3 lakh. Income above Rs 3 lakh and up to Rs 5 lakh, will be taxed at 5 per cent. For income of above Rs 6 lakh and up to Rs 9 lakh, the income tax will be applicable at a 10 per cent rate. For income of more than Rs 12 lakh and up to Rs 15 lakh, income will be taxed at a 20 per cent rate. For those who have a taxable income of above Rs 15 lakh, a 30 per cent income tax rate will be applicable.
Getty Images
3/6
Budget 2023: How your income will be taxed
So, if your taxable income is up to Rs 7,50,000, you will not have to pay any income tax. Let's see how it works . Budget 2023 extended standard deduction to the new income tax regime. Salaried employees and pensioners can claim a standard deduction of Rs 50,000 under the new income tax regime.
Getty Images
4/6
Income tax for income of up to Rs 7.5 lakh
If you earn up to Rs 7.5 lakh, you do not have to pay any income tax under the new income tax regime.
Here's the calculation
Your total income: Rs 7,50,000 Standard deduction: Rs 50,000 Total taxable income = Rs 7,50,00-Rs50,000 = Rs 7,00,00 Income between Rs 3,00,000 and Rs 6,00,000: 5% of Rs 3,00,000 = Rs 15,000 Income between Rs 6,00,000 and Rs 7,00,000 = 10% of Rs 1,00,000 = Rs 10,000 Tax liability = Rs 15,000 + Rs 10,000 = Rs 25,000 Rebate under section 87A = Rs 25,000 Tax payable = 0
Getty Images
5/6
When do you have to pay income tax?
No income tax will payable if your taxable income does not exceed Rs 7.5 lakh. However, if your total taxable income is above Rs 7.5 lakh, you will have to pay income tax.
Getty Images
6/6
How your tax will be calculated
For instance, your total income is Rs 8 lakh. Let's see how your tax will be calculated under the new income tax regime.
Your total income = 8 lakh Standard deduction = Rs 50,000 Total taxable income = Rs 8,00,000 - Rs 50,000 = Rs 7,50,000 Under the new income tax slab, your tax liability will be Income up to Rs 3,00,000: Nil Income between Rs 3,00,000 and Rs 6,00,000: 5% of Rs 3,00,000 = Rs 15,000 Income from Rs 6,00,000 to Rs 7,50,000 = 10% of Rs 1,50,000 = Rs 15,000 Tax liability = Rs 15,000 + Rs 15,000 = Rs 30,000 Cess at 4% on Rs 30,000 = Rs 1,200
So you will end up paying Rs 31,200 in income tax. As your income is above Rs 7.5 lakh, you will not be able to claim any rebate under section 87A. Do remember this while filing your income tax return for FY2023-24.