In 2023, FM Sitharaman announced under the new personal tax regime, the income slabs have been reduced to five from six. The govt also increased the basic tax exemption limit under the new tax regime from Rs 2.5 lakh to Rs 3 lakh.
FM Sitharaman also announced that the new tax regime will now be the default tax regime. The new tax regime was introduced in 2020.
People who earn Rs 5 lakh do not have to pay any income tax, under both regimes. The Budget has raised the limit to Rs 7 lakh in the new tax regime. In other words, people with an income up to Rs 7 lakh do not have to pay any income tax.
For salaried individuals and pensioners, FM has introduced a standard deduction under the new tax regime. Salaried individuals who earn upto Rs 7.5 lakh need not pay any tax under the new tax regime.
The government proposed to increase the limit for leave encashment for tax exemption on retirement of non-government salaried employees to Rs 25 lakh from Rs 3 lakh.