“Personal income tax has seen substantial changes after a very long time, which will benefit the middle class. This country has been waiting for direct taxation to be simplified and compliance to be made easier,” Sitharaman told after presenting Budget 2023.

Here are all you need to know about the income changes announced in Budget 2023

1) REBATE INCREASED TO RS 7 LAKH UNDER THE NEW TAX REGIME

The limit of total income for rebates under section 87A of the Income-tax Act, 1961 has been increased from Rs 5 lakh to Rs 7 lakh for those opting for the new tax regime. Simply put, if your taxable income is below Rs 7 lakh, you do not have to pay any income tax in the new tax regime.

2) HIKE IN BASIC EXEMPTION LIMIT IN NEW THE TAX REGIME

The basic exemption limit under the new tax regime has been revised from Rs 2.5 lakh to Rs 3 lakh. Individuals with an income of up to Rs 3 lakh do not have to pay any income tax under the new income tax regime.

3) NEW INCOME TAX SLABS

Budget 2023 tweaked the income tax slabs under the new tax regime. The maximum exemption limit will be Rs 3 lakh and for every additional Rs 3 lakh income, the next slab rate will apply.

Up to Rs 3 lakh - 0 percent tax
Between Rs 3 and 6 lakh - 5 percent tax
Between Rs 6 and 9 lakh - 10 percent tax
Between Rs 9 lakh and Rs 12 lakh - 15 percent tax
Between Rs 12 lakh and Rs 15 lakh - 20 percent tax
Above Rs 15 lakh above - 30 percent tax

4) STANDARD DEDUCTION INTRODUCED IN THE NEW TAX REGIME

Standard deduction has been extended to the optional tax regime. Salaried individuals opting for the simplified tax regime can avail of a standard deduction of Rs 50,000. Pensioners can also opt for a standard deduction of Rs 15,000 under the new tax regime.

5) SURCHARGE REDUCED FOR SUPER-RICH

In the new tax regime, the highest rate of surcharge of 37 percent on income above Rs 5 crore is reduced to 25 percent.

"To provide impetus to the government’s mission to promote a simplified tax regime, Finance Minister Nirmala Sitharaman introduced a slew of measures to boost the adaptability of the new tax regime," said Parizad Sirwalla, Partner and Head, Global Mobility Services, Tax, KPMG in India.

"The changes in the income tax slabs is a major development towards making India a more consumer driven economy. It would leave more money in the hands of individuals giving them the liberty and power to decide where to spend," said Ankur Nijhawan, CEO, AXA France Vie India Reinsurance Branch.