In Budget 2023, the government has increased the income tax exemption limit up to Rs 7 lakh to make the new tax regime attractive. This is a great relief for the middle class and the employed.
Those whose annual income is less than Rs 7 lakh can save tax on their entire income in this regime. But, if I tell you that this range is not 7, but 7.5 lakh rupees, then it will not be believed.
Actually, in the financial year 2023-24, after many years, the government has given direct exemption regarding Income Tax Slab. Although the new tax regime has been implemented two years ago, but in true sense its days are now over. In the budget, it has been announced to implement the new tax regime by default.
Till now the old tax regime was implemented by default. This means that now you do not tell your HR which regime to choose, then by default your income tax calculation will start with the new regime. If you want to pay tax from the old regime, you must first inform your employer.
Who will get 7 lakh tax exemption
In the budget, the Finance Minister had told that in the new tax regime, the direct exemption of income tax will be 7 lakh rupees. However, tax exemption will not be available on any kind of investment in this regime. That is, such job professionals who are not able to make any investment, now they will not have to pay tax on income up to Rs 7 lakh. But, in the new regime also, the total rules of income tax exemption apply, which give you a chance to avail tax exemption even after the scope of 7 lakhs.
How to save 50 thousand more In order to increase the scope of tax exemption to more than 7 lakhs in the new regime, you will have to claim Standard Deduction. Under the Income Tax Act, every salaried person is given a rebate of Rs 50 thousand in the name of standard deduction. But, its benefit is available only to the working people. So, if you are opting for the new tax regime this year, do not forget to claim standard deduction while filing the next ITR.
Earning is more than this, so if someone’s annual income is more than Rs 7.5 lakh and is adopting the option of savings, then he should stay away from the new tax regime. Actually, in the old regime, tax exemption is given only up to 5 lakhs. Tax has to be saved in the form of investment on income more than this.
Those who are not able to invest in rising inflation, they should adopt the new regime. In this, even after taking tax exemption of 7.5 lakhs, if your income is more, then the tax rate will be less on it. Apart from this, tax up to 3 lakh has been kept nil in the new regime, due to which you will be able to save several thousand in the form of tax.
