Highest surcharge rate reduced from 37% to 25%: FM Sitharaman
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New Delhi, Feb 01: During the Union Budget speech in the House, Union Finance Minister Nirmala Sitharaman on Wednesday announced a change in income tax slabs, up to ₹7 lakh rebate under the new income tax regime.
“Currently, those with income up to ₹5 lahks do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to ₹7 lahks in the new tax regime. Thus, persons in the new tax regime, with income up to 7 lahks will not have to pay any tax," said Finance Minister while presenting Budget 2023.
“The new tax regime has got a great boost from the Budget announcements made by the FM. Taxpayers at both ends of the spectrum will be encouraged under the new regime, as there will be no liability upto annual income of 7 lacs on 1 hand & surcharge on annual income above 5 crores has been reduced from 37 to 25% at the high-income end," said Alok Agrawal, Partner, Deloitte India. Maximum tax, along with surcharge, will be 39%. The current tax rate in the country is 42.74%, among the highest in the world. Budget23 proposes to reduce the highest surcharge rate from 37% to 25% in the new Tax regime. This will result in the reduction of the maximum tax rate to 39%. "Tax rates have been reduced under the new tax regime and the maximum marginal rate drops from 42.74% to 39%," said Saraswathi Kasturirangan, Partner, Deloitte India. Finance Minister also announced that the average processing time for income tax returns was reduced from 93 days to 16 days. For pensioners, the finance minister announced extending the benefit of the standard deduction to the new tax regime. Each salaried person with an income of ₹15.5 lakh or more will benefit by ₹52,500.
The government in Budget 2020-21 brought in an optional income tax regime, under which individuals and Hindu Undivided Families (HUFs) were to be taxed at lower rates if they did not avail of specified exemptions and deductions, like house rent allowance (HRA), interest on the home loan, investments made under Section 80C, 80D, and 80CCD. Under this, total income up to ₹2.5 lahks was tax exempt.