The Finance Minister Nirmala Sitharaman has presented the Union Budget 2023, by the budget speech. The budget proposed minor changes to tax policies, allocation of government spending, and initiatives aimed at boosting the economy and addressing social and environmental issues.
The middle class expected the budget to be a stepping stone to better personal finances, especially savings, as the cost of living and tax liabilities are equally high. Notably, the gross savings of Indian Households fell to an amusing 10.8% in FY 2021-2022, a much lesser figure in comparison to the 15.9% recorded in FY 2020-2021.
In a welcome measure, for the benefit of the salaried class and the pensioners, including family pensioners, standard deduction was introduced to the new tax regime. Each salaried person with an income of Rupees 15.5 lakh or more will benefit by Rs. 52,500.
In short, a standard deduction of 52,500 Rupees will be given to salaried employees, pensioners and beneficiaries of family pension, who draw an income up to Rupees 15.5 Lakhs.
In addition to this, minor adjustments in the tax slabs are also of some relief to the salaried taxpayers.
As per the changes proposed, Resident individuals with total income up to Rs. 5,00,000/- do not pay any tax due to rebate under both old and new regime. It was also proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to Rs. 7,00,000/-.
The limit of Rs. 3 Lakh, for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was Rs. 30,000/-. In line with the increase in government salaries, the Finance Minister Nirmala Sitharaman proposed to increase this limit to Rs. 25 Lakh.
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