Budget 2023 updates: Income tax rebate limit increased from Rs 5 lakh to Rs 7 lakh under new tax regime

Finance Minister Nirmala Sitharaman announced an increase in the income tax rebate limit from Rs 5 lakh to Rs 7 lakh under the new tax regime. She added that the new tax regime will now be the default tax regime. 

The FM also reduced the number of tax slabs in the new tax regime.

They are as follows: Tax for income of Rs 0-3 lakh is nil; income above Rs 3 lakh and up to Rs 5 lakh to be taxed at 5%; income of above Rs 6 lakh and up to Rs 9 lakh to be taxed at 10%; income above Rs 12 lakh and up to Rs 15 lakh to be taxed at 20%; and income above Rs 15 lakh to be taxed at Rs 30%.

The government has estimated the fiscal deficit for 2023-24 at 5.9 per cent of the GDP, Finance Minister Nirmala Sitharaman said while presenting Union Budget 2023-24 in Parliament.

The FM added that the government remains committed to bringing the fiscal deficit down to 4.5 per cent of the GDP by 2025-26.

The capital investment outlay has been increased by 33 per cent to Rs 10 lakh crore, which will account for 3.3 per cent of the GDP.

In a boost for states, the Finance Minister said that the 50-year interest-free loan to state governments will continue for a year more.

The NITI Aayog’s state support mission will be continued for three years, she added.