Budget 2023: How much govt stands to lose after income tax tweaks, check here
2 min read . Updated: 01 Feb 2023, 03:26 PM IST
PremiumShe proposed to increase the tax exemption limit to ₹3 lakh
The government stands to loose ₹35,000 crore of net tax revenue after the changes in the direct taxes and indirect taxes, said Finance Minister Nirmala Sitharaman in Union Budget speech on Wednesday.
"As a result of these proposals, revenue of about ₹38,000 crore – ₹37,000 crore in direct taxes and ₹1,000 crore in indirect taxes – will be forgone while revenue of about ₹3,000 crore will be additionally mobilized. Thus, the total revenue forgone is about ₹35,000 crore annually," said FM Nirmala Sitharaman.
In the Budget, it was proposed to make new income tax regime the default option.
Apart from making the new tax regime as the default option, the Budget has proposed a hike in rebate under the new tax regime from current ₹5 lakh to ₹7 lakh.
"Currently, those with income up to ₹5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to ₹7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to ₹7 lakh will not have to pay any tax," said FM Sitharaman.
Income tax slabs in new tax regime has been changed as well.
FM announced six income slabs starting from ₹2.5 lakh under the new tax regime. She proposed to increase the tax exemption limit to ₹3 lakh. Further, a salaried individual whose income is between ₹3-6 lakh will have a tax rate of 5%, while the rate will be 10% on income of ₹6-9 lakh. Whereas, the tax rate will be 15% on income between ₹9-12 lakh, 20% on income between ₹12-15 lakh, and 30% rate on above ₹15 lakh income.
Explaining this she said that an individual with an annual income of ₹9 lakh will be required to pay only ₹45,000 i.e., 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, which is ₹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," she said.
Sitharaman proposed to reduce the highest surcharge rate from 37% to 25% in the new tax regime.
