• Notification Date: 11-01-2023
• Notification No: N/A

Budget 2023: Proposed Income Tax Rates and Slabs

Union Finance Minister Nirmala Sitharaman is about to present the full-year Budget 2023 on February 1, 2023. Citizens are awaiting the Budget announcements related to income tax slabs. The tax rate for individuals has remained unchanged since the FY 2017-18. The only change that was introduced in February 2020 was the ‘New Tax Regime’. But experts want Budget 2023 to make new changes to the slab rates which would offer more purchasing power to individuals and some relief to the employed taxpayers. 

As per the current income tax provisions, an individual is required to pay taxes based on slab rates. The highest slab rate (after including surcharge and cess) for income exceeding Rs 5 crore in India is at present 42.744 percent. Tapati Ghose, Partner at Deloitte India wants the highest tax rate of 30 percent to be reduced to 25 percent. She has appealed for increasing the threshold limit for the highest tax rate from Rs 10 lakh to Rs 20 lakh. Therefore, the proposed highest slab rate (including surcharge and cess) can be reduced to 35.62 percent. 

At present, 7 income slabs are available under the new tax regime. According to it, annual income up to Rs 2.5 lakh is exempt from tax. According to the old tax regime, if the total income of an individual is not more than Rs 2.5 lakh, the tax rate is nil. Applicable surcharge and educational cess will be levied on the slabs. 

The highest tax rate in neighbouring countries are as follows: 

Hong Kong – 17 percent 

Singapore – 22 percent 

Malaysia – 30 percent 

Ghose said that, it is recommended that India should ensure that tax rates fall in that range.