Back10 big income tax rule changes from 1 April 2023 for taxpayers. Details here
New income tax rule changes from 1 April: Let's take a look at the new tax rules effective from the next financial year
PremiumThere are many changes in the income tax rules effective from this financial year. Changes in income tax slabs to tax rebate limit raised, No LTCG tax benefit on some debt mutual funds are some of the major changes effective from 1 April 2023.
1) New income tax regime to be default regime
Starting, 1 April 2023, the new income tax regime will act as the default tax regime. Tax assessors will still be able to choose from the prior regime. Salaried and pensioners: the new system's standard deduction for taxable income exceeding Rs.15.5 lakhs is ₹52,500. The government in Budget 2020-21 brought in an optional income tax regime, under which individuals and Hindu Undivided Families (HUFs) were to be taxed at lower rates if they did not avail specified exemptions and deductions, like house rent allowance (HRA), interest on home loan, investments made under Section 80C, 80D and 80CCD. Under this, total income up to ₹2.5 lakh was tax exempt.
2) Tax rebate limit raised to ₹7 lakh
The enhancement of tax rebate limit to ₹7 lakh from ₹5 lakh means that the person whose income is less than ₹7 lakh need not invest anything to claim exemptions and the entire income would be tax-free irrespective of the quantum of investment made by such an individual.
3) Standard deduction
There is no change in standard deduction of ₹50000 provided to employees under old tax regime. For pensioners, the finance minister announced extending the benefit of standard deduction to new tax regime. Each salaried person with an income of ₹15.5 lakh or more will benefit by ₹52,500.
4) Changes in Income Tax slabs
The new tax rates are
0-3 lakh - nil
3-6 lakh - 5%
6-9 lakh- 10%
9-12 lakh - 15%
12-15 lakh - 20%
above 15 lakh- 30%
5) LTA
The leave encashment for non government employees is exempt up to a certain limit. This limit was ₹3 lakh since 2002 and is now increased to ₹25 lakh
6) No LTCG tax benefit on these Mutual Funds
From April 1, investments in debt mutual funds will be taxed as short-term capital gains. The move would strip investors of the long term tax benefits that had made such investments popular.
7) Market Linked Debentures (MLDs)
Also, investment in Market Linked Debentures (MLDs) post April 1 will be short term capital assets. With this, grandfathering of earlier investments will end and the impact on the mutual fund industry will be slightly negative.
8) Life Insurance policies
Proceeds from life insurance premium over the annual premium of ₹5 lakh would be taxable from new financial year i.e. from 1st April 2023. Finance Minister Nirmala Sitharaman, while presenting Budget 2023, aslo announced that the new income tax rule won't be applicable on ULIP (Unit Linked Insurance Plan).
9) Benefits to Senior Citizens
The maximum deposit limit for senior citizen savings scheme will be increased to ₹30 lakhs from ₹15 lakhs.
The maximum deposit limit for monthly income scheme will be increased to ₹9 lakhs from 4.5 lakhs for single accounts and ₹15 lakhs from ₹7.5 lakhs for joint accounts.
10) Physical gold conversion to e-gold receipt not to attract capital gains tax
While presenting Budget 2023, Sitharaman said there will not be any capital gain tax if physical gold is converted to an Electronic Gold Receipt (EGR) and vice versa. This will be effective from 1 April 2023.
Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.
