New rules of income tax to be implemented from 1 April 2023.
New rules of income tax to be implemented from 1 April 2023.
Income Tax Rules From April 2023: With the beginning of the new financial year 2023-24, many changes are going to happen in the income tax rules. Change in tax rates, change in tax exemption limit across income tax slabs, no LTCG tax benefit on some debt mutual funds and many more important rules will come into force. Information about changes in income tax rules in further news…
1. New Income Tax Regime
From April 1, 2023, the new income tax system will work as a default tax system. Taxpayers will still be able to choose from prior arrangements.
2. Tax exemption limit increased
From the beginning of April, the tax exemption limit will be increased from 5 lakh to 7 lakh. This means that a person whose income is less than Rs 7 lakh does not need to invest anything to claim the exemption. The entire income will be tax free, irrespective of the amount invested.
3. Standard Deduction
There is no change in the standard deduction of Rs 50000 provided to employees under the old tax regime. For pensioners, the Finance Minister announced the extension of the benefit of standard deduction to the new tax regime. Any salaried person earning at least Rs 15.5 lakh will get a benefit of Rs 52500.
4. Change in income tax slab
- 0-3 Lakh – Nil
- 3-6 lakh – 5 percent
- 6-9 lakh – 10 percent
- 9-12 lakh – 15 percent
- 12-15 lakhs – 20 percent
- Above 15 lakh – 30 percent
5. LTA
Leave encashment for non-government employees is exempt up to a certain limit. This limit was Rs 3 lakh since 2002 and has now been increased to Rs 25 lakh.
6. Life Insurance Policy
From the beginning of the new financial year, income from life insurance premiums in excess of Rs 5 lakh per annum will be taxed.
7. Benefits to Senior Citizens
The maximum deposit limit of Senior Citizen Savings Scheme will be increased from Rs 15 lakh to Rs 30 lakh. The maximum deposit limit of the Monthly Income Scheme has been increased from 4.5 lakhs to 9 lakhs for single accounts and from 7.5 lakhs to 15 lakhs for joint accounts.
8. 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 deprive investors of the long-term tax benefits that had made such investments popular.
9. Market Linked Debenture MLD
Investments in market linked debentures after April 1 will be short-term capital assets. This will end the grandfathering of earlier investments and will have a slightly negative impact on the mutual fund industry.
10. Tax on physical gold
Presenting the Budget for FY 2023, Sitharaman said that if physical gold is converted into electronic gold receipt (EGR), there will be no capital gains tax.
