Budget 2024: Union Finance Minister Nirmala Sitharaman will be reading out the interim Budget for FY2024-25 on February 1, 2024. As the Lok Sabha elections are due early next year, the full budget will be presented after the new government takes charge. The specifics of this budget will only be held valid till the results of the Lok Sabha elections 2024 are announced and a new government comes to power.
Earlier this month, FM Sitharaman while addressing CII Global Economic Policy Forum 2023 Summit said that the Union Budget 2024 scheduled to be presented on February 1 is unlikely to make any "spectacular announcements".
“I don’t want to be a spoilsport, but the 1st February Budget is just a Vote on Account; a Budget to meet expenditure till the next government comes to power. No spectacular announcements. You will have to wait till after the General Election," Sitharaman said.
On February 1, 2023, FM Sitharaman delivered pragmatic, populist-in parts and a growth-oriented Budget. While presenting the Union Budget for FY 2023-24, Sitharaman said that the proposals regarding personal income tax will primarily benefit the country's “hard-working middle class”.
Let's take a quick look at the prominent tax announcements FM Sitharaman made in Budget 2023
The income slabs under the new personal income tax regime were revised from six to five. The tax exemption limit has been increased to Rs 3 lakh.
The new applicable tax rates hold zero taxes for those earning upto Rs 3 lakh, 5% for Rs 3-6 lakh, 10% for Rs 6-9 lakh, 15% for Rs 9-12 lakh, 20% for Rs 12-15 lakh and 30% for Rs 15 lakh and beyond.
“Currently, those with income up to Rs 5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to ₹7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs 7 lakh will not have to pay any tax," Sitharaman said on February 1 while presenting Budget 2023.
Given below are the various tables for the revised income tax slabs and rates for FY23-24:
Income Tax Slab Income Tax Rate
2. Budget 2023: New tax regime - the default tax regime
Finance Minister Sitharaman said that the new tax regime is the default tax regime. She also said that the government will adopt more measures to make the voluntary tax regime more attractive. The new tax regime was introduced in 2020 with six income tax slabs starting from Rs 2.5 lakh.
3. Revised standard deduction
“Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500,” FM Sitharaman said during her speech.
4. Budget 2023: Maximum tax, along with surcharge, will be 39%
5. Budget 2023: Leave encashment
Sitharaman, in her Budget speech, said: “The limit of Rs.3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was Rs 30,000/- pm. In line with the increase in government salaries, I am proposing to increase this limit to Rs 25 lakh.”
For employees in the private sector, the leave encashment after retirement or resignation is taxable as "Income from Salary." Employees can claim an exemption under Section 10 (10AA)(ii) of the Income-tax Act.
