Budget 2023: New Vs Old Tax Regime - Know How Much You Can Save

New Tax Slabs

Income up to Rs 0-3 lakh: No tax

Income up to Rs 3-6 lakh: 5%

Income up to Rs 6-9 lakh: 10%

Income up to Rs 9-12 lakh: 15%

Income up to Rs 12-15 lakh: 20%

Income above Rs 15 lakh: 30%

 Nirmala Sitharaman said, “In the year 2020, I introduced the new personal income tax regime with six income slabs starting from Rs 2.5 lakh. Now I am going to reduce the number of slabs to five and increase the tax exemption limit to Rs 3 lakh. I propose a change in the system.

In Budget 2020, the Finance Minister had given an option to the private taxpayer to either go to the old regime, under which they can avail tax exemption, or to go to the new regime, in which there is no option to claim exemption. In the old tax regime, the tax rate was 30 per cent for those whose annual income was Rs 15 lakh but they could claim exemption.

Those who opted for the new tax regime announced for the first time in 2020 and whose income was more than Rs 15 lakh were taxed at 25 per cent but could not claim exemption.

Learn from the examples below how the new tax regime can help you save more

If your salary is seven lakh rupees annually then you will not have to pay any tax. Earlier this exemption was five lakh rupees annually.

If your salary is Rs 9 lakh per annum, then the amount will be taxed by dividing it into slabs. according to this..

A.Rs 0-3 lakh: No tax (Earlier it was Rs 0-2.5 lakh)

Now the remaining amount of Rs 6 lakh will be taxed under two slabs i.e. 5% for the portion of Rs.3-6 lakh and 10% for the portion of Rs.6-9 lakh.

B. 5% tax on Rs 3 lakh: Rs 15,000

Balance of Rs 3 lakh will be taxed under one slab i.e. 10% on this portion of ? 6-9 lakh

C. 10% tax on Rs 3 lakh: Rs 30,000

Thus the total tax on an amount of Rs 9 lakh (total sum of A, B and C): Rs 45 thousand

However, if the tax on this ? 9 lakh was calculated using the old slab (Rs 0-2.5 lakh exemption and ? 5 lakh exemption), you would have to pay Rs 60,000, which means a saving of 25 per cent from the new slab. Has been