In line with expectations from middle class, Finance Minister Nirmala Sitharaman has announced a big change in the existing income tax structure for salaried employees. She has proposed to increase the income tax rebate to income tax ₹7 lakh from ₹5 lakh for those opting for new tax regime.
Let’s take a look at how the new tax structure looks like as compared to the old one.
New Tax Structure announced in the Budget 2023
| Tax Slabs | Old Tax Regime | New Tax Regime |
| 0-3 lakh | NIL | NIL |
| 3-6 lakh | 5% |
NIL (Income limit for rebate of income tax increased from ₹5 lakh to ₹7 Lakh) |
| 6-9 lakh | 10% | 10% |
| 9-12c lakh | 15% | 15% |
| 12-15 lakh | 20% | 20% |
| Above 15 lakh | 30% | 30% |
“The new tax rates are 0 to ₹3 lakhs – nil, ₹3 to 6 lakhs – 5%, ₹6 to 9 Lakhs – 10%, ₹9 to 12 Lakhs – 15%, ₹12 to 15 Lakhs – 20% and above 15 Lakhs – 30%, ” says Union Finance Minister Nirmala Sitharaman
Standard deduction of ₹45,000 has now been extended to new tax regime for salaried class and pensioners. An individual with ₹9 lakh annual income will now pay ₹45,000 tax which is 5% of the salary — a reduction of ₹15,000 from the present ₹60,000.
My third proposal is for the salaried class and the pensioners including family pensioners, for whom I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of ₹15.5 lakh or more will thus stand to benefit by ₹52,500
The new income tax regime becomes default tax regime. However, the individuals will have an option to continue with the old income tax regime. The government has reduced the surcharge of highest rate from 37% currently to 25% in new tax regime.
Old Tax Structure
| Tax Slabs | Old Tax Regime | New Tax Regime after 2020 |
| Less than 2,5 lakh | No tax levied | No tax levied |
| 2.5 lakh to 5 lakh | 5% tax levied | 5% tax levied |
| 5 lakh to 7.5 lakh | 15% tax levied | 10% tax levied |
| 7.5 lakh to 10 lakh | 20% tax levied | 15% tax levied |
| 10 lakh to 12.5 lakh | 30% tax levied | 20% tax levied |
| 12.5 lakh to 15 lakh | 25% tax levied | |
| More than 15 lakh | 30% tax levied |
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