Let’s delve into the key alterations and their implications:
Revised Tax Slabs: The income tax slabs were adjusted to make the new tax regime more appealing. Under this framework:
Income up to Rs 3,00,000 is tax-exempt. Income between Rs 3,00,000 and Rs 6,00,000 incurs a 5% tax. Tax rates progress gradually up to 30% for income exceeding Rs 15,00,000.Tax Exemption Threshold: Individuals under the new tax system now enjoy a higher tax exemption limit. The exemption on income extends up to Rs 3,00,000, up from the previous limit of Rs 2,50,000, providing an additional exemption of Rs 50,000.
New Default Tax Regime: The new tax regime is set as the default option during income tax return (ITR) filing. Taxpayers must manually opt for the old tax system if preferred.
Increase in Tax Rebate: The rebate threshold, as per Section 87A of the Income-Tax Act (ITA), 1961, has been doubled from Rs 12,500 to Rs 25,000 in the new tax regime, offering more relief to taxpayers.
Standard Deduction: Employees and pensioners opting for the new tax regime are entitled to a standard deduction of Rs 50,000, similar to the benefits under the old tax system.
These changes signify a shift towards empowering individuals to make informed decisions about their finances. The emphasis on increasing tax exemptions, raising rebate thresholds, and providing a standard deduction aims to reduce the tax burden on taxpayers and encourage compliance with the new tax regime. Additionally, the flexibility of choosing between the old and new tax structures allows taxpayers to align their tax planning strategies with their financial goals and preferences. In essence, the revisions introduced in personal taxation from the Union Budget 2023 aim to simplify the tax system, provide relief to taxpayers, and promote greater autonomy in financial decision-making.🚀 Ready to level up your finances? Say goodbye to tax woes with Savingz! 🎉
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