Income Tax Calculator – Old Regime vs New Regime as proposed by Finance Bill, 2023

Income Tax Calculator – Old Regime vs New Regime as proposed by Finance Bill, 2023: Incometax India

Finance Minister Nirmala Sitharaman has in Budget 2023 announced slew of changes in income tax slabs under the new tax regime. The key changes announced on February 1, 2023, are:

Changes in the income tax slabs under the new tax regime

Standard deduction introduced for salaried individuals, pensioners under the new tax regime

• Basic exemption limit hiked to Rs 3 lakh from Rs 2.5 lakh under the new tax regime
• Highest surcharge rate reduced to 25% from 37% under the new tax regime
• Rebate under Section 87A increased to taxable income of Rs 7 lakh under the new tax regime from Rs 5 lakh earlier. This would mean that from FY 2023-24, individuals having taxable incomes up to Rs 7 lakh and opting for the new tax regime will effectively pay zero taxes

The new tax regime would be the default option for taxpayers. However, an individual can choose to opt for the old tax regime.

Revised Tax Slabs under New Tax Regime

*Cess at the rate of 4% will be added to the income tax amount
*Surcharge will be applicable on taxable incomes above Rs 50 lakh

Do note that these changes will be applicable from April 1, 2023, for FY 2023-24. So, in April, when you submit the investment declarations to your employer for calculation of taxes on salary for FY 2023-24, your employer will assume that you have opted for the new tax regime unless you specify otherwise.

However, while filing income tax returns for FY 2022-23 (ending on March 31, 2023) or AY 2023-24, you will continue to use the existing new income tax regime or old tax regime, depending on what you had chosen.

Here are the income tax slabs for FY 2022-23 that you will need to file income tax return this year.

Income tax slabs under existing new tax regime for FY 2022-23

Income tax slabs under the old tax regime for FY 2022-23

Cess will be applicable at 4% on the income tax payable for FY 2022-23. Further, surcharge will be applicable on taxable incomes above Rs 50 lakh. A rebate under Section 87A will be available in both tax regimes for taxable incomes up to Rs 5 lakh for FY 2022-23.

Revised Tax Slabs under New Tax Regime

For Individual/ HUF/ AOP/ BOI/ Artificial Juridical Person (AJP) as per section 115BAC proposed by Finance Bill, 2023

Source: Incometaxindia (Click for Tax Calculator)