This article will discuss the budget highlights for FY 2023-24, presented by the Minister of Finance of India on February 01, 2023. This marks the fourth budget of the Narendra Modi-led NDA government’s second term, starting in 2020. We will also delve into the Economic Survey for 2022–2023, released on January 31, 2023. The Union Budget 2023-24 brings several notable changes benefiting salaried employees. The Union Budget 2023 aims to address various economic challenges and drive positive growth for the nation.
- Deficit of 6.4% (0.3%) (in 2022) – The Finance Minister, Smt. Nirmala Sitharaman presented the budget with a shortage of 6.4% (0.3%) in 2022.
- Total Expenditures: ₹39.45 trillion (US$490 billion) (in 2022)
Budget Highlights for FY 2023-24
To provide a clear overview of the budget highlights for FY 2023-24, let’s take a closer look at the fundamental changes and updates
- Firstly, the government has hiked the Basic exemption limit to ₹ 3 lakhs from ₹ 2.5 lakh, which is currently applicable under the new income tax regime. This move aims to provide tax relief to lower-income individuals. It could help reduce the fiscal deficit.
- Moreover, they have increased the rebate under Section 87A as per the new tax regime from the current income of ₹ 5,00,000 to ₹ 7,00,000. This change will provide additional tax benefits to individuals falling within this income bracket, potentially impacting the total revenue and reducing the tax burden for many taxpayers.
- As per the sources and announcements – 5 IT slabs will be effective in FY 2023-24, Currently 6 IT slabs are being observed.
- Identically, Individuals choosing the updated income tax system and having income up to Rs.7,00,000 lakhs need not pay any income tax.
- Additionally, the government has extended the benefits under section 80-IAC to startups formed before March 2023.
- Salaried employees with net taxable income up to Rs 5,00,000 do not need to pay any tax in the old tax regime as per the rebate under Section 87A
- Furthermore, the government will levy a cess at a rate of 4% on the income tax amount. They will also impose a surcharge on incomes above ₹ 50 lakh.
- According to the income tax law:
- Salaried employees altogether can select a new tax regime for every financial year.
- However, business individuals can only choose to change the tax regime for some years. If they select the new tax regime, they can switch to the old tax regime only once in a lifetime.
The following income tax slabs apply in the new tax regime for FY 2023-24 (AY 2024-25)
|Income Tax Slab||Income Tax Rate|
|Up to Rs. 3,00,000||No Tax|
|Rs. 3,00,001 – Rs. 6,00,000||5%|
|Rs. 6,00,001 – Rs. 9,00,000||10%|
|Rs. 9,00,001 – Rs. 12,00,000||15%|
|Rs. 12,00,001 – Rs. 15,00,000||20%|
|Above Rs. 15,00,001||30%|
Finally, The Union Budget 2023 has been applauded as a positive response from the HR industry as it mainly focused on a skilled workforce.