After an overwhelming mandate in the Lok Sabha elections, the late Arun Jaitley presented his first Union Budget where he raised the personal income tax exemption limit from ₹2 lakh to ₹2.5 lakh. For senior citizens, the exemption limit was increased from ₹2.5 lakh to ₹3 lakh. The limit for deduction under Section 80C was increased to Rs1.5 lakh from ₹1 lakh while deduction limits for interest on home loan was increased to ₹2 lakh from ₹1.5 lakh.

-The deduction limit on health insurance premiums was raised from ₹15,000 to ₹25,000 for the general public

-The deduction limit on health insurance premiums was increased to ₹30,000 from ₹20,000 for senior citizens. 

-The transport allowance exemption was also increased from ₹800 to ₹1,600 per month.

-An additional deduction of ₹50,000 for contribution under the National Pension Scheme (NPS) under Section 80 CCD.

-Surcharge for income above ₹1 crore was increased to 12% from 10%.

-Wealth tax was abolished

-An additional surcharge of 2% on the super-rich who had a taxable income of more than ₹1 crore.

-The tax rebate was raised from ₹2,000 to ₹5,000 for those with income not exceeding ₹5 lakh per annum under Section 87A. 

-The limit of deduction on rent paid under Section 80GG was also raised from ₹24,000 per year to ₹60,000 per year.

-Surcharge for income above ₹1 crore was increased to 15% from 12%.

-The budget also imposed a 10% income tax on dividends in excess of ₹10 lakh annually.

-The tax rate was reduced from 10% to 5% in the ₹2.5 lakh – ₹5 lakh bracket. 

-The finance minister also reduced the tax rebate under Section 87A from ₹5,000 to ₹2,500, applicable to those taxpayers whose annual income is up to ₹3.5 lakh.

-A surcharge of 10% was introduced on those with annual taxable income between ₹50 lakh and ₹1 crore.

 -A standard deduction of ₹40,000 in lieu of current exemption in transport allowance and reimbursement of miscellaneous medical expenses

-Deduction for medical expenditure was raised to ₹50,000 from ₹30,000 for senior citizens.

-Deduction for interest income earned on deposits with banks, and post offices were increased to ₹50,000 from ₹10,000 in the case of senior citizens, along with an exemption from the deduction for tax for interest income up to ₹50,000. 

-The decision to tax long-term capital gains exceeding ₹1 lakh at the rate of 10% without allowing the benefit of any indexation.

-In an election year, the interim budget brought good news for the middle class. Those earning less than ₹5 lakh ended up paying zero tax.

-The standard deduction was also increased to ₹50,000 from ₹40,000 for the salaried class.

The government introduced new slabs. The new tax regime was optional and the taxpayers were given the choice to either remain in the old regime with exemptions and deductions or opt for the new reduced tax rate without those exemptions.

New tax slabs were announced in Budget 2020. The taxpayers were given the choice to either remain in the old regime with exemptions and deductions or opt for the new reduced tax rate without those exemptions.

Zero tax for income up to ₹2.5 lakh

5% for income between ₹2.5 lakh and up to ₹5 lakh

10% for income between ₹5 lakh and up to ₹7.5 lakh

15% for income between ₹7.5 lakh and up to ₹10 lakh

20% for income between ₹10 lakh up to ₹12.5 lakh

25% for income between ₹12.5 lakh and up to ₹15 lakh

30% for income above ₹15 lakh.

-Dividends received from mutual funds and domestic companies are to be taxed at the recipient’s hands.

-If the employer’s contribution exceeds ₹7.5 lakh in a year towards NPS, superannuation fund, and EPF, it will be taxable in the hands of the employee.

These include pre-filled income tax returns (ITR) forms, higher tax deduction at source (TDS) for non-filers of income tax returns, and exemption of dividend payment to REIT/ InvIT from TDS among others.

There were no changes in personal income tax slabs or rates. The government provided a one-time window to correct omissions in income tax returns (ITRs) filed. The Finance Minister announced a new tax rule for taxpayers where a taxpayer can file an updated return on payment of taxes within two years from the end of the relevant assessment year.

-30% tax on the proceeds of virtual/digital assets.

-The tax deduction limit for state government employees’ contribution to NPS raised to 14% from 10%.

This year 2023, there were many changes in the income tax rules effective 1 April 2023. Changes in income tax slabs to tax rebate limit raised, No LTCG tax benefit on some debt mutual funds are some of the major changes effective from 1 April 2023.

-Extension of rebate for annual income up to ₹7 lakh, applicable to people under the new income tax regime.

-A standard deduction of ₹50,000 has also been introduced under the new income tax slab. 

Updated: 26 May 2023, 11:06 AM IST