On 1st February 2023, the finance minister presented the Union Budget 2023 in the parliament. In the budget, many important announcements were made which is going to affect your income and taxes in the coming years. Here are the important points and key takeaway from the Union Budget 2023 for your quick reference:
1. New Income Tax Slab regime –
The finance minister has provided relief to the taxpayers by raising the slab structure. If you opt for the new tax regime (Salaried persons & pensioners including family pensioners), the new tax regime slab rates would be as follows:
|Income Tax Slab||Tax rate|
|Upto Rs 3,00,000||Nil|
|Above Rs 3,00,000 & up to Rs 6,00,000||5%|
|Above Rs 6,00,000 & up to Rs 9,00,000||10%|
|Above Rs 9,00,000 & up to Rs 12,00,000||15%|
|Above Rs 12,00,000 & up to Rs 15,00,000||20%|
|Above Rs 15,00,000||30%|
Important Points related to the new regime:
(a). The new tax regime will be the default choice, but the assessee can still opt for the old tax regime.
(b). Standard deduction under the head salary of Rs 50,000 & Family pension deduction of Rs 15,000 is now to be allowed under the new tax regime.
(c). Income tax rebate under section 87A limit increased from Rs 5 lakh to Rs 7 lakh under the new tax regime.
(d). For salaried persons, income up to Rs. 7.5 Lacs will be out of the tax bracket now in the new tax regime.
Example: If your salary income is upto 7.5 lakhs in the new tax regime, then first your tax calculation would be done as follow:
|Total Salary Income||Rs. 7,50,000|
|Less: Standard Deduction||Rs. 50,000|
|Net Taxable Income||Rs. 7,00,000|
|Tax on Rs. 7,00,000||Rs. 25,000|
|Less: Rebate u/s 87A||Rs. 25,000|
|NET TAX PAYABLE||NIL|
(e). Currently, the highest income tax rate is 42.74% (30% income tax + 37% Surcharge + 4% Cess) if the income of the assessee is more than Rs 5 crores. It has been proposed to reduce the highest surcharge from 37% to 25% in the new tax regime, maximum income tax rate will be 39% (30% income tax + 25% Surcharge + 4% Cess).
2. Presumptive Taxation –
For Presumptive taxation under Section 44ADA & Section 44AD, the turnover/gross receipt limit has been increased to Rs 75 lakhs & Rs 3 crores respectively.
The increase limit u/s 44ADA & 44AD will apply only in case the amount or aggregate of the amounts received during the year in cash does not exceed 5% of the total gross receipts/turnover.
3. Leave Encashment –
The leave encashment limit on retirement for non-government salaried employees has been increased from Rs 3 lakhs to Rs 25 lakhs.
4. For Co-Operative Society –
Extension of 15% concessional tax benefits to new manufacturing co-operative society, starting manufacturing till 31/03/2024 provided they do not avail any specified incentive or deduction.
Also, the Higher limit of Rs 3 crores for TDS on Cash Withdrawal for Co-operative society.
5. For Start-Ups –
The date of incorporation for availing income tax benefits for start-ups business has been extended from 31/03/2023 to 31/03/2024. Furthermore, the benefit of carry forward of losses on the change of shareholding pattern of start-ups has been increased from 7 years of incorporation to 10 years.
6. Capital Gain Exemption –
Income tax exemption from capital gain on an investment in residential house property under sections 54 & 54F is now capped at up to Rs 10 Crores.
7. Online Gaming –
Removal of minimum threshold limit of Rs 10,000 for TDS regarding taxability relating to online gaming. Now, TDS would be without the threshold limit of Rs 10,000 & taxability will be on net winning at the time of withdrawal or at the end of the financial year.
However, for the lottery, crossword puzzle games, gambling, betting, etc. The TDS threshold limit of Rs 10,000 will continue to apply.
8. Conversion of Physical gold into Digital gold –
No treatment of capital gain (i.e., not be regarded as transfer) on Conversion of Physical gold into Digital gold & vice-versa.
9. LIC policies –
Any policies taken on or after 01/04/2023, where the aggregate premium paid for life insurance policies (other than ULIP) is more than Rs 5 Lakhs, income from only those policies with aggregate premiums up to Rs 5 lakhs will be exempt.
Any amount received on the death of the person insured will still be exempt from tax. Insurance policies issued till 31st March 2023 without the above Rs 5 lakh limit still be exempt from tax.
10. Other Important Amendments –
– Mahila Samman Savings Certificate will be made available for two years, with deposits of up to Rs 2 lakh at 7.5 % interest.
– Senior Citizens Savings Scheme deposit limit raised to Rs 30 lakh from Rs 15 lakh.
– PAN will become the common business identifier.
– Reducing the TDS rate to 20% from 30% on the taxable portion of EPF withdrawal in non-PAN cases.
– Taxation on income from Market Linked Debentures.
– Now a taxpayer can obtain a certificate of lower deduction of TDS or NIL rate on sums on which TDS is required to be deducted under section 194LBA by Business Trusts.
– Agnipath Scheme, 2022 – Any payment received from the Agniveer Corpus fund by the Agniveers enrolled under Agnipath Scheme, 2022 is to be exempt from tax.
– Payment made to MSME – Payment made to MSME will be allowed as a deduction when it is actually paid as per section 43B of the income tax act.
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