Middle Class Tax Benefits

Finance Minister Nirmala Sitharaman, in the Union Budget 2023-24 presented on February 1, 2023, introduced key changes aimed at benefiting the middle class. Here’s an overview of the significant announcements:

1. Tax Changes:

The rebate limit for personal income tax under the new tax regime was raised from ₹5 lakh to ₹7 lakh. Individuals earning up to ₹7 lakh annually are exempt from income tax.

2. Tax Slabs:

The new tax regime witnessed a reduction in the number of tax slabs from six to five, accompanied by substantial cuts in tax rates. The revised tax slabs are as follows:
- No tax for those with an income of ₹0–3 lakh.
- A 5% tax rate for income between ₹3-5 lakh.
- A 10% tax rate for income between ₹6–9 lakh.
- A 20% tax rate for income between ₹12–15 lakh.

3. Standard Deduction:

The standard deduction for salaried professionals and pensioners was increased from ₹50,000 to ₹52,500.

4. Investment Limit for Deduction under Section 80C:

The budget raised the limit for investment in tax-saving instruments under Section 80C of the Income Tax Act from ₹1.5 lakh to ₹2.5 lakh.

5. Education:

A higher allocation of funds was earmarked for the education sector, encompassing scholarships and financial support for educational institutions.

6. Housing:

Several measures were introduced to stimulate affordable housing. Increased tax benefits were announced for both developers and homebuyers in a bid to boost the housing sector.

These budgetary adjustments signify the government’s focus on providing relief and support to the middle class. The changes in tax structures and increased deductions aim to enhance the disposable income of individuals and promote investments in housing and education. The Union Budget for 2023-24 reflects a comprehensive approach to fostering economic growth and inclusivity.

_{Repurposed article originally published in the Hindustan Times}