Budget 2023: Old Income Tax Slabs vs New Income Tax Slabs

Taxpayers have the option to choose the regime of their choice as both, the old tax regime and the new income tax regime, co-exist

<div class="paragraphs"><p>Source: blossomstar on Freepik</p></div>
Source: blossomstar on Freepik

Budget 2023 Income Tax Regime

Top stories around the new regime

Budget 2022

One of the key things that the salaried class is looking forward to in the Union Budget 2023 is a revision in the income tax slabs. In Budget 2022, Finance Minister Nirmala Sitharaman did not announce any change in the income tax slabs, which came as a disappointment for salaried individuals. However, in the Budget 2020, the government introduced a new tax regime. Now, taxpayers have the option to choose the regime of their choice as both the old tax regime and the new income tax regime, co-exist. 

In this article, we will take a look at the income tax slabs as per the old tax regime and the new income tax regime.

Old Income Tax Regime

In the old tax regime, an income of up to ₹2,50,000 is exempt from tax, and any income above ₹2,50,000 is taxed as per the above-mentioned income tax rates. While the income tax rates in the old regime may seem high, this tax regime also offers over 70 tax exemptions and deduction options to bring down your tax liability. 

Some common income tax exemptions are House Rent Allowance (HRA) and Leave Travel Allowance (LTA). When it comes to income tax deductions, the most common deduction is Section 80C of the Income Tax Act, which allows you to reduce your taxable income by up to ₹1,50,000 by investing, saving, or spending on specific items. 

New Tax Regime

In the new income tax regime introduced by Finance Minister Nirmala Sitharaman, the number of income tax slabs has increased, along with lower tax rates. The new tax regime also offers a basic exemption for income of up to ₹2,50,000.

While the lower tax rates may seem attractive, the new tax regime does not offer any of the tax exemptions and tax deductions that are available under the old regime.

Suggested Read: Income Tax: The Old Tax Regime vs The New Tax Regime - Which One Should You Opt For

Union Budget 2023

On February 1, 2023, the Finance Minister will present the Union Budget 2023-24 before the Parliament. The Budget 2023 speech is scheduled to begin at 11 am. Some of the expectations of the salaried class from Budget 2023 are a hike in the standard deduction, a revision in income tax slabs, an increase in Section 80C exemption, etc.

Suggested Read: Budget 2023 Expectations: Salaried Employees’ And Senior Citizens’ Wishlist From The Budget