Budget 2023: Finance Minister Nirmala Sitharaman presented the country’s next general budget for the financial year 2023-24 in Parliament on 1 February 2023. In this budget, under the new tax regime, the government has announced that no tax will be levied on income up to Rs 7 lakh. Along with this, for the first time, it has also been decided to give standard deduction of Rs 52,500. Let us tell you, Finance Minister Nirmala Sitharaman has not made any changes in the old tax system. Let us know what is the standard deduction included in the new tax regime??
What is Standard Deduction? (What is standard deduction)
Standard deduction is the portion of income that is taxed after deduction. For example, understand that if you adopt the new tax regime, then you will not have to pay any tax on earning up to Rs 7 lakh. But another Rs 52,500 can be saved through standard deduction. People earning Rs 15.5 lakh or more in a year will get this benefit on adopting the new tax regime. Finance Minister Nirmala Sitharaman said, “I propose to extend the benefit of standard deduction in the new tax regime as well. Salaried individuals whose income is Rs 15.5 lakh or more will get a benefit of Rs 52,500 under this.”
Even after the introduction of the new tax system, taxpayers were mostly adopting the old tax system. To link them with the new tax regime, the government has given exemption of the first standard deduction. Let me tell you, in the new tax regime, the taxpayer does not have the option of saving money through 80C, 80D. For this reason people were holding back in adopting the new tax system.
Keep in mind that if you do not choose any of the new and old tax regime options during income tax return filing, then you will become a part of the new tax regime by default.