Budget 2023: The Payroll Changes You Need To Know

What Are the Changes to the New Regime in Budget 2023?

• The new regime is the default regime if the employee doesn’t make a choice
• New tax rates and slabs have been relaxed to benefit employees
• A Standard Deduction of INR 50,000 applies to salaried persons. Those earning a family pension are also eligible for a deduction of INR 15,000 or one-third of the income, whichever is lower
• The tax rebate has been raised from INR 5 lacs to INR 7 lacs
• The surcharge for those earning more than INR 5 crore has decreased from 37% to 25%

Other Amendments That Impact the Payroll

• The leave encashment exemption limit (lifetime) has been increased from INR 3 lacs to INR 25 lacs
• The salary threshold for Professional Tax (PT) has been revised from INR 15,000 to INR 25,000 for Karnataka State
• The EPFO extended the deadline for exercising the option to contribute to a higher pension to March 3, 2023

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