All eyes were on the tax statements as the Union Budget 2023 was presented in the Indian Parliament on Wednesday, February 1, and Finance Minister Nirmala Sitharaman delivered her much-anticipated Budget speech. The central, NDA-led government led by Prime Minister Narendra Modi was widely expected to provide tax relief to the common man this year, as it is the final budget before the 2024 Lok Sabha elections.
On the one hand, the slowing economy is reducing tax receipts, while on the other hand, state spending is increasing. Industries, business sectors, and market analysts are hoping that the NDA government’s final budget before the Lok Sabha elections will focus on job creation and inclusive growth.
In its chapter on India’s inclusive growth, the Economic Survey stated, “According to both official and unofficial sources, employment levels have increased in the current fiscal year, as the Periodic Labour Force Survey (PLFS) shows that the urban unemployment rate for people aged 15 and over fell from 9.8 percent in the quarter ending September 2021 to 7.2 percent a year later (quarter ending September 2022). This is accompanied by an increase in the labour force participation rate (LFPR), confirming the economy’s early exit from the pandemic-induced slowdown in 2022-23 “.
There are various tax slabs in India
Individuals in India pay income tax using a slab system. A slab system specifies different tax rates for different income levels. It means that tax rates will continue to rise as taxpayer income increases. This taxation method enables the country to have progressive and equitable tax systems. These tax brackets are subject to change with each budget. These slab rates vary depending on the type of taxpayer.
Individual taxpayers in income tax are divided into three categories:
- Individuals (under the age of 60), both residents and non-residents
- Senior citizens who live in the area (60 to 80 years of age)
- Residents who are over the age of 65 (aged more than 80 years)
Income Tax
Income tax is levied on the net taxable income of a Hindu Undivided Family or an individual during the fiscal year that begins on April 1 and ends on March 31 of the following year. It is calculated using the net taxable income of an individual or a business. For the convenience of its citizens, the Government of India has set certain slab rates, i.e., higher and lower slab rates.
The Union Budget 2023-24 announced income tax slab rates
In the new tax regime, the personal income tax rebate limit was raised to Rs 7 lakh from Rs 5 lakh previously. People earning up to Rs 7 lakh are exempt from paying income tax.
Finance Minister Nirmala Sitharaman stated, “I introduced a new personal income tax regime with six income slabs beginning at Rs 2.5 lakhs in 2020. I propose that the tax structure in this regime be changed by reducing the number of slabs to 5 and raising the tax exemption limit to Rs 3 Lakhs “.
An individual earning 15 lakhs will pay 1.5 lakhs in tax, down from 1.87 lakhs under the new tax structure.
| Income Tax Slab | New Tax Regime |
| Upto 3Lakhs | Nil |
| 3-6 lakhs | 5% |
| 6-9 lakhs | 10% |
| 9-12 lakhs | 15% |
| 12-15 lakhs | 20% |
| Above 15 lakhs | 30% |
The Finance Minister also reduced the country’s highest surcharge from 37% to 25%.
