NEW DELHI: Union Minister for Finance and Corporate Affairs  Nirmala Sitharaman made a slow of  major announcements in personal income tax to substantially benefit the middle class in the Budget 2023 thereby preparing a ground for the upcoming 2024 Lok Sabha Elections.

 In her second last budget speech presented in the Parliament today, Sitharaman announced  that persons with income up to Rs. 7 lakh will not pay income tax in new tax regime.
The tax exemption limit is increased to Rs. 3 lakh, number of slabs reduced to five”.
She said the salaried class and pensioners to gain on extension of standard deduction benefit to the new tax regime. The maximum tax rate reduced to 39 per cent from 42.74 per cent.  ‘The new tax regime will be the default tax regime.”
She said the citizens to have the option to avail the benefit of old tax regime as well.
With the objective of benefitting the hard working middle class of the country, Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitaraman made five major announcements with respect to personal income tax while presenting the Union Budget 2023-24 in Parliament today. 

These announcements pertaining to rebate, change in tax structure, extension of benefit of standard deduction to the new tax regime, reduction of highest surcharge rate and extension of limit of tax exemption on leave encashment on retirement of non-government salaried employees will provide substantial benefits to the working middle class.
In her first announcement regarding rebate, she proposed to increase the rebate limit to Rs.7 lakh in the new tax regime, which would mean that the persons in the new tax regime, with income up to Rs. 7 lakh will not have to pay any tax.

Currently, those with income up to Rs. 5 lakh do not pay any income tax in both old and new tax regimes.
Providing relief to middle-class individuals, she proposed a change in the tax structure in the new personal income tax regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs. 3 lakh.  
This will provide major relief to all tax payers in the new regime.

An individual with an annual income of Rs. 9 lakh will be required to pay only Rs. 45,000/-. This is only 5 per cent of his or her income.

It is a reduction of 25 per cent on what he or she is required to pay now, i.e. Rs. 60,000/-. Similarly, an individual with an income of Rs. 15 lakh would be required to pay only Rs. 1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of Rs. 1,87,500/.
The third proposal of the budget provides major relief to the salaried class and the pensioners including family pensioners as the Finance Minister proposed to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs. 15.5 lakh or more will thus stand to benefit by Rs. 52,500/-. 

At present, standard deduction of Rs. 50,000/- to salaried individuals and deduction from family pension up to Rs. 15,000/- is currently allowed only under the old regime.
As part of her fourth announcement with respect to personal income tax, Smt. Nirmala Sitaraman proposed to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime for income above Rs. 2 crore. 

This would result in reduction of the maximum tax rate to 39 per cent from the present 42.74 per cent, which is among the highest in the world.

However, no change in surcharge is proposed for those who opt to be under the old regime in this income group.
As part of the fifth announcement, the budget proposed extension of limit of tax exemption on leave encashment to Rs. 25 lakh on retirement of non-government salaried employees in line with the government salaried class. At present, the maximum amount which can be exempted is Rs. 3 lakh.   
The budget proposed to make the new income tax regime as the default tax regime.  However, citizens will continue to have the option to avail the benefit of the old tax regime.

Commending the resilience shown by India amidst multiple crises, Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman credited this to country’s focus on wide-ranging reforms and sound policies. “Implemented through Sabka Prayas resulting in Jan Bhagidari and targeted support to those in need, these helped us perform well in trying times,” she elaborated.

India’s rising Global Profile:

While presenting the Union Budget 2023-24 in Parliament today, the Finance Minister underscored that India’s rising global profile is because of several accomplishments. These include:

Unique world class digital public infrastructure, e.g., Aadhaar, Co-Win and UPI
Covid vaccination drive in unparalleled scale and speed
Proactive role in frontier areas such as achieving the climate related goals, Mission LiFE
National Hydrogen Mission
Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY)

Highlighting the efforts during the Covid-19 pandemic, Smt Sitharaman said that during pandemic, the scheme to supply free food grains to over 80 crore persons for 28 months ensured that no one goes to bed hungry.

“Continuing our commitment to ensure food and nutritional security, we are implementing, from 1st January 2023, a scheme to supply free food grain to all Antyodaya and priority households for the next one year, under PM Garib Kalyan Anna Yojana (PMGKAY),” she pointed out.

The entire expenditure of about Rs. 2 lakh crore will be borne by the Central Government, the Finance Minister said.