Tax Rebate, LTA, Standard Deduction: 10 Income Tax Rules To Change From Today | Full List Here

 


Income Tax Rules: Major changes in income tax slabs to increased tax rebate limit, and no LTCG tax benefit on debt mutual funds are some of the changes that will be effective from 1 April 2023.

New Delhi: As the new financial year 2023-24 begins from April 1, individual taxpayers will be impacted by several changes. These changes were recently announced by Union Finance Minister Nirmala Sitharaman during the Budget presented on February 1, 2023. Moreover, the recently passed Finance Bill 2023 also introduced a set of new changes which will likely affect one’s personal finances.

Read More:- FY 2023-24: From New Income Tax Regime To LPG Cylinder Price – 6 Major Changes From Today Will Impact Your Pockets Directly

NEW INCOME TAX REGIME TO BE DEFAULT REGIME

From 1 April 2023, the new income tax regime comes into effect as the default tax regime. Taxpayers will still have the option of using the previous regime. The Centre during 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. In this, a total income up to Rs 2.5 lakh was tax exempt.

Also Read– Indian Railways List Of Cancelled Trains On April 1, 2023; Complete IRCTC Details Here

TAX REBATE LIMIT INCREASED TO RS 7 LAKH

The increase in the tax rebate limit from Rs 5 lakh to Rs 7 lakh means that individuals with incomes under Rs 7 lakh do not need to make any investments to qualify for exemptions. These individuals’ income will be tax-free regardless of the number of investments they make.

STANDARD DEDUCTION

There will be no change in standard deduction of Rs 50000 provided to employees under old tax regime. However, for the pensioners, the finance minister announced extending the benefit of standard deduction to new tax regime. Now, all salaried individuals with an income of Rs 15.5 lakh or more will benefit by Rs 52,500.

Also Read– Atal Pension Scheme: Know Eligibility, Benefits And Other Details

LTA

As per the new rules, the leave encashment for non-government employees is exempt up to a certain limit. This limit was Rs 3 lakh since 2002 and is now increased to Rs 25 lakh.

CHANGES IN INCOME TAX SLABS

The new tax rates include

0-3 lakh – nil

3-6 lakh – 5%

6-9 lakh- 10%

9-12 lakh – 15%

12-15 lakh – 20%

above 15 lakh- 30%

Also Read– Gold Rates Rise On 31 March 2023: Check Prices In Delhi, Mumbai, Chennai & Top Cities

NO LTCG TAX BENEFIT ON MUTUAL FUNDS

From April 1, the investments in debt mutual funds will be subject to short-term capital gains tax and the investors would lose the long-term financial advantages that had made such investments attractive.

MARKET LINKED DEBENTURES (MLDS)

From April 1, the investment in Market Linked Debentures (MLDs) will be short term capital assets and with this, the grandfathering of earlier investments will end and the impact on the mutual fund industry will be slightly negative.

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LIFE INSURANCE POLICIES

From the beginning of April 1, the proceeds from life insurance premium over the annual premium of Rs 5 lakh would be taxable. During Budget 2023, Finance Minister Nirmala Sitharaman announced that the new income tax rule won’t be applicable on ULIP (Unit Linked Insurance Plan).

BENEFITS FOR SENIOR CITIZENS

The highest deposit limit in the Senior Citizen Savings Scheme will rise from Rs 15 lakh to Rs 30 lakh. Moreover, the monthly income scheme’s highest deposit limit will also rise from 4.5 lakh to 9 lakh for single accounts and from 7.5 lakh to 15 lakh for joint accounts.

Read More:- Post Office Monthly Income Scheme (POMIS), Recurring Deposit Interest Rates Increased for April-June Quarter

PHYSICAL GOLD CONVERSION TO E-GOLD RECEIPT NOT TO ATTRACT CAPITAL GAINS TAX

During Budget 2023, FM Sitharaman said there will not be any capital gain tax if physical gold is converted to an Electronic Gold Receipt (EGR) and vice versa. The new change comes into effect from 1 April 2023.

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