The new income tax system for the fiscal year 2023–2024 has altered the income tax slabs in Budget 2023. Every year, the finance minister of India announces new income tax slabs. There are now two distinct income tax systems. Tax incentives are available to taxpayers under both the new and the previous regimes.
On February 1, 2023, this year's Union Budget was announced by Finance Minister Nirmala Sitharaman. The most recent budget introduced certain adjustments to the current income tax slab. But before understanding the new income tax regime let’s first understand what is income tax slab.
What is an Income tax slab?
The income Tax Slab is described as the system under which Individual Taxpayers are required to pay their Income Taxes. An individual may fall under a different tax bracket depending on their income.
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As a result, people with greater incomes will have to pay more taxes. To keep the nation's tax system equitable, the slab system was implemented. Every time a budget announcement is made, the slabs frequently vary.
Budget 2023-24: New Income tax slabs
- Up to Rs.3 lakh - Nil
- Above Rs.3 lakh - Rs.6 lakh - 5% of the total income
- Above Rs.6 lakh - Rs.9 lakh - 10% of the total income
- Above Rs.9 lakh - Rs.12 lakh - 15% of the total income
- Above Rs.12 lakh - Rs.15 lakh - 20% of the total income
- Above Rs.15 lakh - 30% of the total income
Which is better- Old tax vs New tax regime:
This question has no definitive answer because it relies on your financial status and your income. There are benefits and drawbacks to both the new and old income tax slabs.
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By forcing investments in specialised tax-saving mechanisms, the previous income tax system gradually ingrained in people a culture of saving. It encourages saving for upcoming occasions like marriage, education, property purchases, medical expenses, etc whereas taxpayers are free to invest their money without any restrictions under the new tax system. Under the new programme, your investment behaviour is not subject to any requirements for laws and regulations.
The revamped new tax system would be more advantageous for someone who merely qualifies for a deduction of Rs 1,50,000 under section 80C. The previous tax system might have been more advantageous for someone who had a mortgage loan and other deductions.
The current tax system is still in place, and taxpayers can select the old or new tax system that best suits their needs. Failure to transition to the new tax system is not subject to any fines from the government.
