Budget 2023: All about the tax relief announced for the middle class

Finance Minister Nirmala Sitharaman introduced a slew of changes to the 'new income tax slab' in order to reduce the tax liabilities for middle class individuals. Finance Minister Nirmala Sitharaman introduced a slew of changes to the 'new income tax slab' in order to reduce the tax liabilities for middle class individuals.

Relief in personal income tax is expected to raise disposable income and transition taxpayers to the new tax regime. Relief in personal income tax is expected to raise disposable income and transition taxpayers to the new tax regime.

Sitharaman increased the income tax rebate limit to Rs 7 lakh from the fiscal year starting April 1 under the new tax regime as against the previous Rs 5 lakh. Sitharaman increased the income tax rebate limit to Rs 7 lakh from the fiscal year starting April 1 under the new tax regime as against the previous Rs 5 lakh.

The basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 lakh. Rs 2.5 lakh basic exemption limit is prescribed in old tax regime. The basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 lakh. Rs 2.5 lakh basic exemption limit is prescribed in old tax regime.

The FM also proposed a 5% tax for income between Rs 3–6 lakh, 10% for income between Rs 6-9 lakh, 15% for income between Rs 9-12 lakh, 20% for income between Rs 12–15 lakh & 30% above Rs 15 lakh. The FM also proposed a 5% tax for income between Rs 3–6 lakh, 10% for income between Rs 6-9 lakh, 15% for income between Rs 9-12 lakh, 20% for income between Rs 12–15 lakh & 30% above Rs 15 lakh.

Maximum income tax rate reduced to about 39% from 42.7% after a reduction in the highest surcharge to 25% from 37%. Maximum income tax rate reduced to about 39% from 42.7% after a reduction in the highest surcharge to 25% from 37%.

The old tax regime will continue to be there and new regime will be a default one. The old tax regime will continue to be there and new regime will be a default one.

Individuals will have the choice of paying tax under the new slab with lower rates, but foregoing deductions or continue paying tax under the old tax laws and claiming the applicable exemptions. Individuals will have the choice of paying tax under the new slab with lower rates, but foregoing deductions or continue paying tax under the old tax laws and claiming the applicable exemptions.

Rs 3 lakh limit for tax exemption on leave encashment on retirement of non-government salaried employees increased to Rs 25 lakh. Rs 3 lakh limit for tax exemption on leave encashment on retirement of non-government salaried employees increased to Rs 25 lakh.

The deposit limit for senior citizen savings schemes has been doubled to Rs 30 lakh & for Monthly Income Account Scheme to Rs 9 lakh. The deposit limit for senior citizen savings schemes has been doubled to Rs 30 lakh & for Monthly Income Account Scheme to Rs 9 lakh.

A new small savings scheme for women, offering 7.5% interest rate on deposits of up to Rs 2 lakh for a tenor of 2 years, has been announced in the Budget. A new small savings scheme for women, offering 7.5% interest rate on deposits of up to Rs 2 lakh for a tenor of 2 years, has been announced in the Budget.