Budget 2023 has still allowed the taxpayers to choose between the New & Old Tax regimes simultaneously but now the New Tax Regime is the default tax regime and if you want to choose the old one, you must submit a declaration to your employer regarding this else the default one will be applicable for you.

Now let us have a look at the synopsis of the Budget 2023 which has a direct impact on the salaried class especially.

• Default Tax Regime: New tax regime has become the default tax regime while one has the option to continue with the old tax regime as well;
• Discourages Investments: Moving towards the new tax regime discourages investments for saving taxes and this will ensure individuals have more money in their hands to spend more and ultimately money returns back to the Govt.;
• Standard Deduction: Standard deduction of Rs. 50,000/- has been introduced in the new tax regime for salaried persons like it was earlier in the old tax regime;
• Tax rebate U/S 87A: Tax rebate U/S 87A has been increased up to Rs. 25,000/- in the new tax regime;
• Basic Exemption Limit: The basic exemption limit has been increased to Rs. 3 Lakh from earlier limit of 2.5 Lakh;
• Reduced Tax Slabs: The nex tax regime now has only 5 tax slabs from earlier 7 slabs;
• Rebate Limit: The limit U/S 87A has been increased for income up to Rs. 7 Lakh from earlier limit of Rs. 5 Lakh;
• Leave Encashment Limit: Tax exemption limit for Terminal(Retirement) Leave Encashment at the time of retirement has been enhanced from earlier limit of Rs. 3 Lakh to Rs. 25 Lakh;
• Reduced Surcharge Rate: The surcharge limit has been reduced from 37% to 25% for income above Rs. 5 Crore;
• Lower Tax Rate: Thus, the maximum tax rate has been reduced to 39% from existing 42.74%;
• All these newly introduced benefits have been made keeping in mind the emphasis on the new tax regime.