Even as the Budget 2023 exempted individuals with income up to Rs 7 lakh from income tax, the Finance Bill 2023 has given further relief to individual taxpayers by providing a marginal relief. With this, those having income in the range of Rs 7,00,001-Rs 7,29,000 will be treated at par with the person having an income of up to Rs 7 lakh, thus no tax payable.
Explaining the provision, the finance ministry said under the new tax regime with effect from April 1, if a taxpayer has annual income of Rs 7 lakh s/he pays no tax. But if s/he has income of Rs 7,00,100 s/he pays tax of 25,010.
Thus an additional income of Rs 100 leads to a tax of Rs 25,010.
Hence, marginal relief is proposed to that so that the tax what one pays should not be more than the income that exceeds Rs 7 lakh (Rs 100 in this case), the ministry said.
Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the amendment to Finance Bill seeks to provide a marginal relief to individual taxpayers having borderline income by proposing a deduction of income tax payable in excess of the differential income above Rs 7 Lakh.
“Working out the math, an individual having income up to (approx.) INR 7,27,700 could stand to benefit from this marginal relief,” Jhunjhunwala added.
The budget 2023-24 had announced the tax rebate whereby no tax would be levied on those with annual income of up to Rs 7 lakh under the new tax regime. The move which experts felt was a push for salaried class taxpayer to switch to new tax regime where no exemptions on investments is provided.
Under the new tax regime, taxpayers can avail lower tax rates if they are willing to forego exemptions
Under the revamped new tax regime, no tax would be levied for income up to Rs 3 lakh. Income between Rs 3-6 lakh would be taxed at 5 per cent; Rs 6-9 lakh at 10 per cent, Rs 9-12 lakh at 15 per cent, Rs 12-15 lakh at 20 per cent and income of Rs 15 lakh and above will be taxed at 30 per cent. Further, a Rs 50,000 standard deduction was allowed under the new regime.
Now the government has brought in amendments to the Finance Bill 2023, which has given ‘marginal relief’ to those taxpayers with annual income a little over Rs 7 lakh.
Although the government has not specified the threshold income which would be eligible for marginal relief, tax experts said as per computation, individual taxpayers with income of Rs 7,27,777 would be benefited by this relief.
(With Inputs From PTI)
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