Just like every year, there were many expectations by people from Budget 2023. From an increase in section 80C deduction limit from 1.5lakhs to 2 lakhs to an increase in basic exemption limit & even more tax sops for homebuyers & investors.
Nirmala Sitharaman, the Finance Minister, proposed the Union Budget for 2023-24, which included attractive changes under the new tax regime. The old tax regime, however, remained in place.
In the old regime, deductions, and exemptions were allowed and existed for years. In the old scheme, tax rates were divided into three slabs that seemed high, but can be reduced with allowable deductions and exemptions.
Salaried individuals primarily benefitted from deductions and exemptions. Some of the deductions are allowed alike to all who do not need any payment or expenditure. Some of the deductions need to have an amount spent or invested as prescribed in the Income Tax Law.
Check out the Old Tax Regime deductions and exemptions and new tax regime rates!
| Old Tax Slabs | Old Income Tax Rates | New Tax Slabs | New Income Tax Rates |
| Upto Rs 2.5 lakh | NIL | Upto Rs 3 lakh | NIL |
| Rs 2.5 – Rs 5 lakh | 5% | Rs 3 lakh – Rs 6 lakh | 5% |
| Rs 5 – Rs 10 lakh | 20% | Rs 6 lakh – Rs 9 lakh | 10% |
| Above Rs 10 lakh | 30% | Rs 9 lakh – Rs 12 lakh | 15% |
| Rs 12 lakh – Rs 15 lakh | 20% | ||
| Above Rs 15 lakh | 30% | ||
Under the revised new tax regime, individuals with taxable incomes below Rs 7 lakh will no longer have to pay taxes. In contrast to the old tax regime, which required individuals to make certain tax-saving investments to reduce their taxable income, the new regime does not allow these investments.
The revised new tax regime allows salaried employees to claim a standard deduction of Rs 50,000 if their income exceeds Rs 7.5 lakh. Under the new tax regime, you are eligible to receive a tax rebate on income up to Rs 7 lakh.
According to the revised tax slabs, an individual earning Rs 7.5 lakh will no longer be required to pay income tax of Rs 39,000 (including cess). There is a tax savings of Rs 39,000 at this income level.
Let’s see how much you can save under the Old Tax Regime and the New Tax Regime:
There are several deductions available in the old tax regime that are no longer available in the new one! Several components of your salary structure are tax-exempt.
To calculate which regime is better for you, we have considered deduction under Section 80C of 1,50,000, Section 80D 25,000, and Section 80CCD 50,000 for NPS. As well as a standard deduction of Rs 50,000 and a basic HRA deduction of up to Rs 1,000,000!
For an income of 7.50 lakhs
| Post Budget (Old Regime) | Post Budget (New Regime) | |
| Total Income | Rs. 7,50,000 | Rs. 7,50,000 |
| Exempt allowance (HRA) | Rs. 1,00,000 | 0 |
| Standard deductions | Rs. 50,000 | Rs. 50,000 |
| Chapter VI A Deductions (Section 80C, 80D & 80CCD 1B) | Rs. 2,25,000 | 0 |
| Taxable Income | Rs. 3,75,000 | Rs. 7,00,000 |
| Income Tax | Rs. 0 | 0 |
| Health and Education Cess | 0 | 0 |
As per the new budget, you should opt for the new tax regime.
For an income of 10 lakhs
| Post Budget (Old Regime) | Post Budget (New Regime) | |
| Total Income | Rs. 10,00,000 | Rs. 10,00,000 |
| Exempt allowance (HRA) | Rs. 1,00,000 | 0 |
| Standard deductions | Rs. 50,000 | Rs. 50,000 |
| Chapter VI A Deductions (Section 80C, 80D & 80CCD 1B) | Rs. 2,25,000 | 0 |
| Taxable Income | Rs. 6,25,000 | Rs. 9,50,00 |
| Income Tax | Rs. 37,500 | Rs. 52,500 |
| Health and Education Cess | Rs. 1500 | Rs. 2100 |
You should opt for Old Regime as it will provide you the benefit of Rs. 15,000 over New Regime.
For an income of 15 lakhs
| Post Budget (Old Regime) | Post Budget (New Regime) | |
| Total Income | Rs. 15,00,000 | Rs. 15,00,000 |
| Exempt allowance (HRA) | Rs. 1,00,000 | 0 |
| Standard deductions | Rs. 50,000 | Rs. 50,000 |
| Chapter VI A Deductions (Section 80C, 80D & 80CCD 1B) | Rs. 2,25,000 | 0 |
| Taxable Income | Rs. 11,25,000 | Rs. 14,50,000 |
| Income Tax | Rs. 1,50,000 | Rs. 1,40,000 |
| Health and Education Cess | Rs. 6000 | Rs. 5600 |
You should opt for the New Regime as it will provide you the benefit of Rs. 10,000 over the Old Regime.
For an income of 20 lakhs
| Post Budget (Old Regime) | Post Budget (New Regime) | |
| Total Income | Rs. 20,00,000 | Rs. 20,00,000 |
| Exempt allowance (HRA) | Rs. 1,00,000 | 0 |
| Standard deductions | Rs. 50,000 | Rs. 50,000 |
| Chapter VI A Deductions (Section 80C, 80D & 80CCD 1B) | Rs. 2,25,000 | 0 |
| Taxable Income | Rs. 16,25,000 | Rs. 19,50,000 |
| Income Tax | Rs. 3,00,000 | Rs. 2,85,000 |
| Health and Education Cess | Rs. 1200 | Rs. 11,400 |
You should opt for the Old tax regime
For an income of 50 lakhs
| Post Budget (Old Regime) | Post Budget (New Regime) | |
| Total Income | Rs. 50,00,000 | Rs. 50,00,000 |
| Exempt allowance (HRA) | Rs. 1,00,000 | 0 |
| Standard deductions | Rs. 50,000 | Rs. 50,000 |
| Chapter VI A Deductions (Section 80C, 80D & 80CCD 1B) | Rs. 2,25,000 | 0 |
| Taxable Income | Rs. 46,25,000 | Rs. 49,50,000 |
| Income Tax | Rs. 12,00,000 | Rs. 11,85,000 |
| Health and Education Cess | Rs. 48,000 | Rs. 47,400 |
If you need deductions you can go for the old tax regime, otherwise, if there are no deductions the new tax regime is available.
