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In her last annual Budget ahead of the general elections in 2024, Finance Minister Nirmala Sitharaman on 1 February has brought changes in the Income Tax regimes, which was unchanged since 2014.

Sitharaman introduced a new tax regime in 2020, and also gave taxpayers the option to choose between the traditional tax system and the new one.

News Tax regime: Definition

In the new income tax regime, lower income tax rates and more slabs with no option of availing tax exemptions and deductions have been made available for taxpayers. It continues to exist with the old income tax regime.

What is new in the New Tax Regime?

In her latest Budget presentation, FM Sitharaman made changes in the personal income tax slab. According to this, the new tax rates are 0 to 3 lakhs is nil, for 3 to 6 lakhs its 5 percent, for 6 to 9 Lakhs is 10 percent, 9 to 12 Lakhs its 15 percent, 12 to 15 Lakhs its 20 percent and above 15 Lakhs its 30 percent.

ALSO READ: Old vs new income tax slabs after Budget: Which is better?

Here is the new income tax slab:

The new income tax slab
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The new income tax slab

ALSO READ: Old vs new income tax slabs after Budget: Which is better?

Due to the income slabs and the various tax rates, multiple exemptions and deductions are not applicable.

Lets look at the pros and cons of the new income tax slab mentioned in the Union Budget 2023-24.

Pros of New Tax Regime:

The current tax regime is still in place, and you as a taxpayer have the option to choose the best suitable one for you, that is either the old tax regime or the new tax regime. The Government has not enforced compulsion to switch to the new tax regime.

The new tax regime offers the flexibility to the taxpayer to invest their money as they prefer. With the new scheme, there is no obligatory requirement to invest in tax saving schemes and insurance plans which may not be in alignment with their financial goals.

With multiple tax slabs, you as the taxpayer will fit into the tax slab that best meets your yearly income.

Cons of New Tax Regime:

According to experts, the present exemptions will be reviewed gradually and slowly erased from the new tax regime.

With no exemptions, the total taxable amount will be higher as compared during the old tax regime.

Though there are six tax slabs, it may not be beneficial for all taxpayers if the income-tax authorities decide to do away with the old regime completely.

Experts take on New Tax regime:

Deepashree Shetty, Associate Partner/ Tax and Regulatory Services, BDO India: ‘Several measures have been introduced to promote the New Tax Regime (NTR) for individual taxpayers. These include increasing the basic exemption limit, change in the income slabs, extending the scope of tax rebate, extension of standard deduction, etc.

The proposal to make NTR as the default tax regime supports the Government’s initiative to digitise and simplify the tax process for individuals. This would also mean significant changes in the payroll procedures of employers for salaried taxpayers.’

Archit Gupta, Founder, and CEO, Clear: Taxpayers who want to avoid the hassles of claiming traditional deductions, who usually do not opt for HRA or claim other reimbursements via an employer or do not want to invest in traditional 80C, may now see the new regime as an option.

Abhishek Soni, Co-founder & CEO, of Tax2win, a Fisdom company: As expected, this year after a long wait, the budget finally focused on the middle-class/ salaried class/ small business category taxpayers of India. The introduction of new slabs with lesser tax rates under the new tax regime as well as the announcement of introducing a single simplified common ITR form in the future, clearly shows the government's objective to simplify the income tax for the common people. For small businesses and professionals also, the threshold limit for presumptive business income has been increased, which will not just reduce the compliance burden for them but ensure more people do the compliance. Further, no tax is levied up to 7 Lakh of income, a big relief for millions of salaried individuals."

Sandeep Agrawal, Co-Founder and Director, TeamLease RegTech: Today’s Union Budget has made 05 announcements under the individual tax category. Most of these announcements aimed at making the New Tax regime more attractive for middle class salaried individuals. The Budget proposed 05 Tax Slabs (as against the 06 Slabs) and also increased the income limits under each slab thereby reducing the tax liabilities for individuals earning up to Rs. 15 Lakhs. The budget also provided an additional benefit of Rs. 52,500 to individuals earning over Rs. 15 Lakh via introduction of Standard deduction under the New Tax regime

 

ABOUT THE AUTHOR
Saurav Mukherjee
A business media enthusiast...believe to listen more, than just blabbering like others.
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