The income tax changes that Finance Minister Nirmala Sitharaman announced in the Budget 2023 have taken effect as the new fiscal year 2023-2014 begins. Here are the huge changes to the assessment system:
- New default tax system:
Beginning on April 1, 2023, the new income tax system will be used as the default tax system. On the other hand, taxpayers can still select to adhere to the previous tax system. Under the new tax system, salaried individuals and pensioners with taxable income greater than Rs 15.5 lakh are eligible for a standard deduction of Rs 52,500.
- Standard deduction:
The previous tax system’s standard deduction of Rs. 50,000 has been extended to the new tax system for pensioners.
- Limitation on tax rebates:
Individuals whose income is less than Rs. 7 lakh are no longer subject to any taxes, regardless of their investments, as the cap on tax rebates has been increased from Rs. 5 to Rs. 7 lakh.
- Leave Travel Allowance (LTA)
Non-government employees are exempt from the requirement to cash in on their leave up to a maximum of Rs 25 lakh. - Short-term capital gains tax on debt mutual funds:
Short-term capital gains tax will be levied on debt mutual fund investments starting today.
- Market Linked Debentures (MLDs)
From today, interests in MLDs will be viewed as momentary monetary resources, finishing grandfathering of past speculations with marginally adverse consequences on the common asset area.
- Premium taxes for life insurance:
Life insurance premiums above Rs 5 lakh per year will be taxed starting on April 1, 2023, but Unit Linked Insurance Plans (ULIPs) are exempt from this rule.
- Benefits for the Senior Citizens:
The most elevated store limit for the Senior Resident Investment funds Plan has expanded from Rs 15 lakh to Rs 30 lakh, while the most noteworthy store limit for the month to month pay conspire has expanded from Rs 4.5 lakh to Rs 9 lakh for single records and from Rs 7.5 lakh to Rs 15 lakh for shared services.
- Conversion of physical gold into e-gold receipts is exempt from capital gains tax:
Converting physical gold to Electronic Gold Receipts (EGRs) or vice versa will not be subject to capital gains tax beginning on April 1, 2023.
- Changes in income tax slabs:
The income tax slabs have been updated, with a 0% tax rate for those earning less than Rs 3 lakh, a 5% tax rate for those earning more than Rs 6 lakh, a 10% tax rate for those earning more than Rs 9 lakh, a 15% tax rate for those earning more than Rs 12 lakh, a 20% tax rate for those earning more than Rs 15 lakh, and a 30% tax rate for those earning more than Rs 15 lakh.
