No compulsion, but new tax regime more attractive, says Sitharaman after Budget 2023

This year’s Budget has brought in a slew of changes in the optional tax regime, which was introduced in 2020-21. As per the changes, no tax would be levied on people with annual income of up to Rs 7 lakh under the new tax regime. While an individual will have to forego exemptions and deductions on investments in the new tax regime, the finance minister has allowed a standard deduction of Rs 50,000 in it.

However, it made no changes for those who continue in the old regime that provides for tax exemptions and deductions on investments and expenses such as HRA.  The old tax regime provides for a similar standard deduction of Rs 50,000 and no tax on income up to Rs 5 lakh.

She further stated the country has been waiting for a direct tax regime which is simplified and easy in compliance. “The ultimate interest is to make the simpler (new) regime more attractive,” Sitharaman added.

As per the revamped new tax regime: 

Rs 0-3 lakh: Nil

Rs 3-6 lakh: 5 per cent

Rs 6-9 lakh: 10 per cent

Rs 9-12 lakh: 15 per cent

Rs 12-15 lakh: 20 per cent

Over Rs 15 lakh: 30 per cent

The move is aimed at incentivising people to shift to the new tax regime, which has not seen much traction since launch in FY21.

The government, meanwhile, also proposed to reduce highest surcharge rate from 37 per cent to 25 per cent in new tax regime.

Sitharaman, while presenting the present government’s last full-fledged budget before next year’s Lok Sabha elections, also announced one of the biggest hikes in capital spending in the past while staying fiscally prudent. Sitharaman’s fifth straight budget comes at a time when the economy is slowing due to global headwinds and there is a need for increased spending on social sectors as well as ramping up incentives for local manufacturing.

Union Budget 2023: All you need to know

• ↗️ Finance Minister Nirmala Sitharaman’s Union Budget 2023 has some big takeaways
• ↗️ First, what everyone has been looking forward to: changes in the new income tax regime. She has made the new tax regime more attractive. There are changes in the rebate limit and in tax slabs. What does this mean for the taxpayer?
• ↗️ FM Sitharaman proposed a 33% increase in capital investment outlay, raising it to Rs 10 lakh crore. This is the biggest in the past decade. What does it mean?
• ↗️ Some articles get cheaper and others get costlier due to changes in customs duty. Here is a list
• ↗️ The capital outlay for the railways has been increased to the highest ever – Rs 2.40 lakh crore. The government is trying to create more jobs
• ↗️ FM Sitharaman said the fiscal deficit will fall to 5.9% of the GDP. What does it mean for the stakeholders?
• ↗️ The FM called it the ‘first Budget of Amrit Kaal’. PM Narendra Modi said it will build a strong foundation for a developed India. What did opposition leaders say?