Budget 2023: How much India stands to lose after income tax, indirect duty tweaks

India will lose Rs. 35,000 crore of net tax revenue after the Union Budget tweaked direct and indirect taxes to provide relief to the middle-income group, Finance Minister Nirmala Sitharaman said today.

"Revenue of about Rs. 38,000 crore – Rs. 37,000 crore in direct taxes and Rs. 1,000 crore in indirect taxes – will be forgone while revenue of about Rs. 3,000 crore will be additionally mobilized. Thus, the total revenue forgone is about Rs. 35,000 crore annually," Sitharaman said while announcing the Union Budget for the next fiscal year that starts April 1.

The Budget today proposed to make new income tax regime the default option. Basic exemption limit from next fiscal year will go up to Rs 3 lakh from Rs 2.5 lakh now under the new income tax regime. Income tax slabs in new tax regime has been changed as well.


A rebate under section 87A has been enhanced under the new tax regime from current income level of Rs 5 lakh to Rs 7 lakh. Thus, individuals opting for new income tax regime having income upto Rs 7 lakh will not pay any taxes.

The income tax slabs under the new income tax regime will be as follows:
a) Between Rs 0 to Rs 3 lakh - 0% tax rate
b) Between Rs 3 to 6 lakh - 5%
c) Between Rs 6 to 9 lakh - 10%
d) Between Rs 9 lakh to Rs 12 lakh - 15%
e) Between Rs 12 lakh to Rs 15 lakh - 20%
f) Above Rs 15 lakh above - 20%

Among other measures, Sitharaman proposed to reduce the highest surcharge rate from 37% to 25% in the new tax regime. This would result in reduction of the maximum tax rate to 39 per cent.

Meanwhile, new cooperatives that commence manufacturing activity till March 2024 to attract lower tax rate of 15%.

With promotion of exports and enhancement of domestic manufacturing in focus, Finance Minister Nirmala Sitharaman on Wednesday announced a rejig in custom duties on various commodities and products.

FM Sitharaman proposed a reduction in the number of customs duty rates on goods except textiles, from 21 to 13. As a result, there are minor changes in cess and levies on products such as toys, naphtha and automobiles, she said.