The basic exemption limit has been hiked to Rs 3 lakh under the new tax regime in Budget 2023. According to the current income tax slabs, under both the tax regimes (old and new), the basic exemption limit is Rs.2.5 lakh. Further, under the old tax regime, the basic exemption limit is based on the age of the individuals.

For individuals below the age of 60 years, the basic exemption limit is Rs.2.5 lakh in a financial year. For senior citizens (between 60 and 80 years), the basic exemption limit is Rs.3 lakh. For super senior citizens (80 years or more), the basic exemption limit is Rs 5 lakh in the old tax regime.

However, there is no such distinction between individuals, senior citizens and super senior citizens in the revised new tax regime.

Any individual opting for the new income tax regime will have a basic exemption limit of Rs 2.5 lakh in the financial year for FY 2022-23.

Shalini Jain, Tax Partner, EY India says, "Increase in basic income exemption limit under the new tax regime for FY 2023-24 along with standard deduction of Rs 50,000 will give more spendable income in the hands of lower and middle income taxpayers. "

The new income tax regime was announced in Budget 2020 and became effective from the financial year 2020-21 (April 1, 2020). Currently, a salaried individual gets the option to opt for the old tax regime and continue to avail of common tax deductions and tax exemptions. Otherwise, he/she can opt for the new concessional income tax regime without any common tax deductions and tax exemptions. Under the new tax regime, the individual will forgo 70 deductions and tax exemptions, which include HRA tax exemption, LTA tax exemption, a deduction up to Rs 1.5 lakh under Section 80C and so on.

The new tax regime was announced for individuals who were unable to claim the benefits of the deductions and tax exemptions available. It also helps to ease the compliance burden for salaried taxpayers. Currently, the new tax regime offers 6 tax slabs and lower tax rates as compared with the old income tax regime.

According to income tax laws, a salaried person can opt for the new tax regime at his/her convenience in every financial year. In case an individual has a business income, he/she cannot choose the tax regime at his/her convenience every year. If the person opts for the new tax regime, he/she can switch back to the old tax regime only once in their life