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Union Budget 2023 is set out to have a significant impact on the personal finances of many. Depending on your income, you are in for some substantial changes. On the whole, the government has kept the middle-class population in mind while increasing the tax benefits, restructuring tax slabs, and raising the rebate.

Further, the maximum rate of tax for high-income earners has also been slashed by reducing the surcharge. To benefit salaried non-government employees, the leave encashment exemption limit has also been raised. All this consolidated into one budget makes a big difference to individuals when it comes to managing their personal finances.

Interested in discovering how it will impact your finances? Let's unravel them together.

Key Announcements That Impact Your Personal Finance

Below mentioned are some of the substantial alterations made by Budget 2023 that provide taxpayers like you with more money to retain for personal use.

1. Tax Slab Reduction under New Regime

The tax slabs have been reduced from 6 to 5. The new tax slabs are - Nil up to Rs.3 Lakhs; 5% between Rs.3 Lakhs and Rs.6 Lakhs; 10% between Rs.6 Lakhs and Rs.9 Lakhs; 15% between Rs.9 Lakhs and Rs.12 Lakhs; 20% between Rs.12 Lakhs and Rs.15 Lakhs; and 30% above Rs.15 Lakhs.

2. Raised Standard Deduction

The standard deduction for salaried employees earning over Rs.15.5 Lakhs has been significantly increased from Rs.2,500 to Rs.52,500 in the new tax regime. This is set to grant the taxpayers a much-needed boost in their net earnings.

3. Tax-free Income up to Rs.7 Lakhs

The rebate offered under section 87A has been doubled from Rs.12,500 to Rs.25,000. This means that if your income falls below Rs.7 Lakhs, you can enjoy tax-free earnings under the new tax regime.

4. Surcharge Cut for High Earners

For high-income earners earning above Rs.5 Crores, the government has made a favourable change by reducing the rate of surcharge from 37% to 25%. This means that the maximum tax rate, inclusive of income tax, cess, and surcharge, has now dropped from 42.7% to 39%.

5. Increased Leave Encashment Exemption

The previous tax exemption limit for non-government salaried employees on leave encashment was set at Rs.3 Lakhs. However, the government has now generously raised this limit to a substantial amount of Rs.25 lakh.

6. Tax on Life Insurance Income

If the total premium paid for life insurance policies (except ULIPs) purchased after 1st April 2023 exceeds Rs.5 Lakhs, then the income from such policies will be taxable. However, any sum received on the death of the insured will remain tax-free.

Conclusion

All these changes combined together have a deeper impact on your personal finances. To get a comprehensive understanding of it, check out the Union Budget 2023: Key Highlights video by Angel One where experts break down the details of the Union Budget in simple language.

And don’t forget to subscribe to their YouTube channel and explore the #BudgetWithAngel series to get more such insightful analysis.

Source: Indian Union Budget 2023

Disclaimer:

1. This blog is exclusively for educational purposes

2. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. https://bit.ly/2VBt5c5

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