No income tax up to Rs 7.27L earnings per annum in new tax regime: FM

July 17, 2023: Union finance minister Nirmala Sitharaman has said that the government has provided several tax benefits to middle-class people, including income tax exemption for those earning up to Rs 7.27 lakh per annum. Addressing the concerns of the taxpayers, the government has now expanded the scope of tax exemptions under the new regime. There is a standard deduction of Rs 50,000 for the taxpayers. The grievance among taxpayers was that there was no standard deduction under the new tax regime. This provision has been given now, the union minister said.

The finance minister said that the decision was made after calculations by their team, considering various factors. It is only at Rs 27,000 that the break-even comes, after which one must start paying tax, she said.

There has been a 100% increase in total percentage of ITRs processed within one day of their filing compared to the previous year, the FM said. This will enable faster processing of tax refunds.

Tax exemptions under the new tax regime

• No income tax will be levied for annual income up to Rs 7 lakh, which effectively increases to Rs 7.27 lakh with marginal relief provisions.
• A standard deduction of Rs 50,000 will now be available for taxpayers.
• Tax exemption on medical expenditure of senior citizens has been increased from Rs 30,000 to Rs 50,000.
• There is an exemption from GST on life-saving drugs and cancer medicines.

Among other tax benefits one can avail under the new regime include:

• Family pensioners can claim a standard deduction of Rs 15,000 from their pension income.
• Employer contribution towards NPS is eligible for tax deduction under Section 80CCD(2).
• A deduction is available on interest paid on a housing loan taken for a rented-out property under Section 24(B) of the income tax act.

New income tax regime slab for Financial Year 2023-24