Finance Minister Nirmala Sitharaman clarified on Friday, July 14, 2023, that annual income up to Rs 7.27 lakh will not be taxed. This is because the basic exemption limit for the new income tax slabs is Rs 3 lakh, and taxpayers who opt for the new tax regime will also be eligible for a standard deduction of Rs 50,000. This means that the effective exemption limit for taxpayers who opt for the new tax regime is Rs 7.27 lakh.
FM at an event in Udupi, Karnataka said that if your annual income is Rs 7.27 lakh, you will not pay any income tax under the new tax regime. This is because the basic exemption limit of Rs 3 lakh plus the standard deduction of Rs 50,000 will cover your entire income.
The breakeven point of Rs 27,000 refers to the point at which taxpayers who opt for the new tax regime will start paying income tax. This is because the standard deduction of Rs 50,000 is only available under the new tax regime.
So, if your annual income is above Rs 7.27 lakh but below Rs 7.54 lakh, you will only be able to claim the standard deduction of Rs 50,000 if you opt for the new tax regime. If you opt for the old tax regime, you will not be able to claim the standard deduction, so you will have to pay income tax on your entire income above Rs 7.27 lakh.
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