Salaried persons earning up to Rs 7 lakh annually will not have to pay any income tax under the new tax regime, Finance Minister Nirmala Sitharaman announced in her Budget speech for the financial year 2023-’24.

Under the revised tax structure, the limit on rebate on income tax has been increased to Rs 7 lakh from the existing Rs 5 lakh. The finance minister also announced revised income tax slabs. However, both these provisions will be available for taxpayers who have opted for the new tax regime announced in the 2020 Budget.

Under the new tax regime, taxpayers are not allowed to claim any exemptions on their taxable income. These exemptions include deductions under Section 80C of the Income Tax Act, insurance premium, relief on home loans etc.

How does your tax liability change: An example

The finance minister also announced that the standard deduction of Rs 50,000 will also be available under the new tax regime. The provision is currently available only to those who have opted for the old tax regime.

The new tax regime has also been made the default option for taxpayers. However, they can opt for the old tax regime if they want.