- Date : 02/02/2023
- Read: 2 mins
How the Budget proposals affect taxpayers with Rs.50 lakhs in income
Personal finance and income tax were major highlights of the Union Budget 2023, wherein the finance minister made multiple changes. In the latest budget, the new tax regime was made more popular with a slew of changes to attract taxpayers to use the new regime. Here are some of the proposed changes –
- The new tax regime would be made default.
- The limit of taxable income eligible for claiming a rebate under Section 87A has been increased from Rs.5 lakhs to Rs.7 lakhs.
- The income tax slabs under the new regime have been reduced. The number of slabs has been brought down to five from the existing six.
- The tax slabs have also changed.
- The peak surcharge rates have changed.
- A standard deduction of Rs.50,000 is introduced in the new regime for salaried employees.
Related - Know the detailed changes in the new tax regime in Union Budget 2023
With the proposed changes, those in the higher income brackets can benefit from the new tax regime. Here’s how.
Let’s assume you earn a salary income of Rs.50 lakhs a year. You invest Rs.1.5 lakhs in Section 80C avenues. Per the existing tax slabs, here’s how your tax liability will be calculated under the old and the new tax regimes –
Per existing laws
Under the current rules, the new tax regime helps you save Rs.15,600 in tax liability even without claiming deductions.
Per the proposed rules under Union Budget 2023
Per the latest budget, the new tax regime enhances tax savings allowing you to save Rs.70,200 in taxes.
So, from the next financial year, know which regime gives you the best tax-saving advantage on your income and then use the suitable regime to lower your tax liability.
Personal finance and income tax were major highlights of the Union Budget 2023, wherein the finance minister made multiple changes. In the latest budget, the new tax regime was made more popular with a slew of changes to attract taxpayers to use the new regime. Here are some of the proposed changes –
- The new tax regime would be made default.
- The limit of taxable income eligible for claiming a rebate under Section 87A has been increased from Rs.5 lakhs to Rs.7 lakhs.
- The income tax slabs under the new regime have been reduced. The number of slabs has been brought down to five from the existing six.
- The tax slabs have also changed.
- The peak surcharge rates have changed.
- A standard deduction of Rs.50,000 is introduced in the new regime for salaried employees.
Related - Know the detailed changes in the new tax regime in Union Budget 2023
With the proposed changes, those in the higher income brackets can benefit from the new tax regime. Here’s how.
Let’s assume you earn a salary income of Rs.50 lakhs a year. You invest Rs.1.5 lakhs in Section 80C avenues. Per the existing tax slabs, here’s how your tax liability will be calculated under the old and the new tax regimes –
Per existing laws
Under the current rules, the new tax regime helps you save Rs.15,600 in tax liability even without claiming deductions.
Per the proposed rules under Union Budget 2023
Per the latest budget, the new tax regime enhances tax savings allowing you to save Rs.70,200 in taxes.
So, from the next financial year, know which regime gives you the best tax-saving advantage on your income and then use the suitable regime to lower your tax liability.
