Zero Income Tax for those earning up to Rs 7 lakh, 25% cut for others as Budget brings relief

In  a massive concession to the “hard working” middle class, Finance Minister Nirmala Sitharaman today slashed the income tax on various slabs by as much as 25% and raised the Zero tax slab to Rs 7 lakh from Rs 5 lakh earlier.

All those earning an income tax of up to Rs 7 lakh will not have to pay any tax, she announced in her budget for 2023-24  presented in Parliament today.

Those earning a salary of Rs 9 lakh will see their income tax outgo going down by 25% to around 45,000 a year from Rs 60,000 earlier. The new tax rate works out to a mere 5%.

Similarly, those earning a salary of 15 lakh will now have to pay an income tax of Rs 1,87,000 which is 20% lower than the Rs 1.5 lakh that they were paying earlier.

For those in the highest income tax bracket of 42.74% the surcharge rate on this tax has been reduced from 37% to 25%  in the new tax regime. The finance minister said this tax bracket was amongst the highest in the world and therefore has been scaled down to a more realistic level.

In a big move for senior citizens, the investment cap for the Monthly Income Scheme and Senior Citizens’ Saving Scheme have been raised.

Sitharaman said that the direct tax concessions would entail a loss in revenue of around Rs 38,000 crore to the national exchequer.

According to economists, the tax concessions which come as a welcome relief to the middle class will result in more disposable income in the hands of individuals. This would help to boost demand for goods and services in the economy and spur growth.