The new financial year (FY) 2023-24 will begin on April 1 and the announcements made by Union finance minister Nirmala Sitharaman in the annual Feb 1 Union budget will come into effect as soon as FY23 kicks in. It is, however, the changes to income tax rules, that will affect taxpayers the most.
Also Read: New income tax regime, other rules to kick in from Apr 1: What taxpayers need to know
Here are, therefore, the 10 major income tax rule changes effective from April 1:
(1.) Default tax regime: As announced by the finance minister, the new tax regime will be the default regime if, while submitting returns, a person does not state which of the two regimes – old or new – will they submit the return under.
(2.) Tax rebate limit raised: The rebate limit has been increased from ₹5 lakh to ₹7 lakh. This means that an individual who has a salary of less than ₹7 lakh a year, need not make investments to claim exemptions.
(3.) Standard deduction: The deduction of ₹50,000 under the old regime remains unchanged. This facility has now been extended to the new regime, and, therefore, a salaried person with an yearly income of ₹5.15 lakh or more, will benefit by ₹52,500.
(4.) Income tax slabs: The new tax rates are:
Yearly salary up to ₹3 lakh: Nil
₹3 lakh- ₹6 lakh: 5%
₹6 lakh to ₹9 lakh: 10%
₹9 lakh to ₹12 lakh: 15%
₹12 lakh to Rs15 lakh: 20%
Above ₹15 lakh: 30%
(5.) LTA: The leave travel allowance encashment limit, which was ₹3 lakh since 2002, now raised to ₹25 lakh.
(6.) No LTCG tax benefits: Investment in debut mutual funds will be taxed as short-term capital gains, instead of the existing long-term capital gains. This means investors will no longer have access to long-term tax benefits.
(7.) Market-linked debentures: Post April 1, investment in MLDs will be short-term capital assets. According to experts, the impact of such a move 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, will be taxable.
(9.) Benefits for senior citizens: Maximum deposit limit under senior citizens savings scheme extended to ₹30 lakh from ₹15 lakh, to ₹9 lakh from ₹4.5 lakh and to ₹15 lakh from ₹7.5 lakh for monthly income scheme (single and joint accounts respectively).
(10.) Physical gold conversion: There will be no capital tax gain if physical gold is converted to Electronic Gold Receipt (EGR), or vice-versa.
