One of the major changes introduced in this year’s Union budget 2023 entail the tweaking of income tax slabs. Another change pertains to the making the new tax regime the default one, although tax payers can still opt for the old one.
The new tax regime was introduced in 2020 with six income slabs starting from ₹2.5 lakh. This has now been changed by reducing the number of slabs to five.
However, it is vital to note that tax payers can still opt for the old tax regime wherein 5 percent, 20 percent and 30 percent tax is levied on incomes in the bracket of ₹2.5 lakh to ₹5 lakh, ₹5 lakh to ₹10 lakh, and above ₹10 lakh, respectively.
According to the latest tax slabs (under the new tax slabs), there will be no income tax on income up to ₹3 lakh. Those earning between ₹3 lakh to ₹6 lakh will be made to pay 5 percent tax. A higher tax rate of 10 percent will be applicable on income bracket between ₹6 lakh and 9 lakh.
Those who want to calculate their income tax can use the calculator here:
For instance, if your income is ₹10 lakh, the tax levied will be 5% of ₹3,00,000 ( ₹15,000) + 10 percent of ₹3,00,000 (30,000) + 15% of ₹1,00,000 (15,000) = ₹60,000.
Income (Rs) | Tax rate (%) |
₹3 lakh- ₹6 lakh | 5% |
₹6 lakh- ₹9 lakh | 10% |
₹9 lakh- ₹12 lakh | 15% |
₹12 lakh- ₹15 lakh | 20% |
Over ₹15 lakh | 30% |
“An individual with an annual income of 9 lakh will be required to pay only 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, i.e., 60,000. Similarly, an individual with an income of 15 lakh would be required to pay only 1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of ` ₹1,87,500,” said the finance minister during her Budget speech.