Union Budget 2023: New vs old tax regime; which one is better?

Union Budget 2023-24 New Tax Slabs:Finance Minister Nirmala Sitharaman presented the Union Budget for the year 2023 on Wednesday, 1 Feb and unpacked the surprises for the salaried class. The FM tweaked the slabs to provide some relief to the middle class, "It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to ₹7 lakh", Sitharaman said. The announcement was then followed by a hooting by the members of the house. She further said under the new personal tax regime, the number of slabs would be reduced to five.

"I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to ₹3 lakh", Sitharaman said.

Until now, a 5 per cent tax is levied on total income between ₹2.5 lakh and ₹5 lakh, 10 per cent on ₹5 lakh to ₹7.5 lakh, 15 per cent on ₹7.5 lakh to ₹10 lakh, 20 per cent on ₹10 lakh to ₹12.5 lakh, 25 per cent on ₹12.5 lakh to ₹15 lakh, and 30 per cent on above ₹15 lakh.

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Check here all the updated tax slabs in the new and old tax regimes:

Union Budget 2023: New Tax Slabs

1. No tax would be levied for income up to₹3 lakh
2. Income between₹3-6 lakh would be taxed at 5 per cent
3. Income between₹6-9 lakh would be taxed at 10 per cent
4. Income between₹9-12 lakh at 15 per cent
5. Income between₹12-15 lakh at 20 per cent
6. Income of₹15 lakh and above will be taxed at 30 per cent.

Union Budget 2023: Old Tax Slabs

1. Income up to₹2.5 is exempt from taxation under the old tax regime.
2. Income between₹2.5 to₹5 lakh is taxed at the rate of 5 per cent under the old tax regime.
3. Personal income from₹5 lakh to₹7.5 lakh is taxed at a rate of 15 per cent under the old regime
4. Income between₹7.5 lakh to₹10 lakh is taxed at a rate of 20 per cent in the old regime
5. Under the old regime personal income above₹10 lakh is taxed at a rate of 30 per cent.

The income tax slabs have not been changed since 2014. The basic personal tax exemption limit was last revised in 2014. FM Sitharaman introduced a new income tax regime while presenting the budget 2020. However, the new tax regime remains optional for taxpayers.