3/31/23, 4:47 PM New income tax slabs under new tax regime, no LTCG tax benefit on debt mutual

ebt mutual funds: 15 income tax changes from April 1 …

English Edition | 31 March, 2023, 04:46 PM IST | Today's Paper

New income tax slabs under new tax regime, no

LTCG tax benefit on debt mutual funds: 15 income
tax changes from April 1
By Preeti Motiani, ET Online Last Updated: Mar 31, 2023, 01:16 PM IST

Synopsis
Budget 2023 has made many changes under the Income Tax Act, 1961. Some of these
changes will come into effect from the start of new financial year 2023-24 i.e., from April
1, 2023. Here are 15 incomes tax changes that will come into effect from tomorrow that
will impact your taxes and money.

April 1 marks the beginning of the new

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financial year. There are many changes

that will come into effect in the new
financial year. These changes can
impact your money and taxes.

Here is a look at all the income tax

changes will come into effect from
April 1, 2023.

Also read: NPS withdrawal, post office schemes’ investment limits,

hallmarking of gold: Seven money changes that will come into effect in
April 2023

1. New income tax slabs under new tax regime

Budget 2023 has revised the income tax slabs under the new tax regime. As per
the announcement made, the income tax slabs have been reduced from six to
five. The new income tax slabs under the new tax regime are as follows:

Income range (In Rs) Income tax rate (%)

0 to 3,00,000 0

3,00,000 to 6,00,000 5

6,00,000 to 9,00,000 10

9,00,000 to 12,00,000 15

12,00,000 to 15,00,000 20

Above 15 lakh 30

The new income tax slabs under the new tax regime comes into effect from
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3/31/23, 4:47 PM New income tax slabs under new tax regime, no LTCG tax benefit on debt mutual funds: 15 income tax changes from April 1 …

April 1, 2023 for FY 2023-24. Do note that new income tax slabs under the new
tax regime will be applicable to all the incomes earned in FY 2023-24, provided
you opt for new tax regime in FY 2023-24.

Also Read: Income tax slabs for FY 2023-24

2. No income tax payable for incomes up to Rs 7 lakh under new tax regime
If an individual having taxable income up to Rs 7 lakh opts for the new tax
regime in FY 2023-24, then he/she is not liable to pay tax. This is because tax
rebate under Section 87A of the Income-tax Act, 1961 has been doubled under
the new tax regime from Rs 12,500 to Rs 25,000. Thus, if an individual's
taxable income (after claiming all the eligible deductions) does not exceed Rs 7
lakh under the new tax regime, then no tax will be payable.

Also Read: No income tax for incomes up to Rs 7 lakh

3. Basic exemption limit hiked under new tax regime

With the changes in the income tax slabs under the new tax regime, the basic
exemption limit has been hiked to Rs 3 lakh - an increase of Rs 50,000. Till FY
2022-23, the basic exemption limit was Rs 2.5 lakh for all individuals
irrespective of their age.

Thus, individuals opting for the new tax regime in FY 2023-24 will not have to
pay taxes or file income tax return if their income does not exceed Rs 3 lakh in
a year.

Also Read: Basic exemption limit hiked to Rs 3 lakh for FY 2023-24

4. Standard deduction benefit under new tax regime

Budget 2023 has also extended the benefit of standard deduction of Rs 50,000
to salaried individuals and pensioners under the new tax regime from FY
2023-24. Similarly, family pensioners opting for the new tax regime will also
be eligible for standard deduction of Rs 15,000 under the new tax regime.

The standard deduction for salaried individuals will help them reduce their
taxable income. For instance, individual having income of Rs 7.5 lakh will pay
zero tax under the new tax regime by claiming the benefit of standard
deduction.

Also Read: Standard deduction introduced under new tax regime

Also Read: Salaried to pay NIL tax for incomes up to Rs 7.5 lakh

Also Read: Three deductions that can be claimed under new tax regime

5. New tax regime becomes default option

Budget 2023 has made the new tax regime as the default option. This would
mean that if you do not specifically opt for the old tax regime, then income tax
on your incomes will be calculated based on the new tax regime. Thus, while
submitting your investment declaration to your employer for FY 2023-24, then
ensure that you have opted your choice of tax regime. If no option is chosen,
then the employer will deduct the tax on the basis of the new income tax slabs
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under the new tax regime.

This would also mean that if an individual does not file income tax return
(ITR) on or before the expiry of the deadline, then they will not be able to opt
for the old tax regime to file ITR.

Also Read: New tax regime becomes default option but old regime still
available

6. Lower surcharge rate under new tax regime

The government has lowered the surcharge rate under the new tax regime in
Budget 2023. As per the new law, for an individual having taxable income
exceeding Rs 5 crore and opting for new tax regime, surcharge levied will be at
25% instead of 37%.

This reduction in surcharge rate will help high-net worth individuals to lower
their income tax.

Also Read: Highest surcharge rate reduced for high income earners

7. No LTCG benefit in debt mutual funds

Budget 2023 has removed the indexation benefit available on debt mutual
funds. From April 1, 2023, any investment made in debt mutual funds (with
those where equity investment does not exceed Rs 35%), then capital gains
from such investments will be taxed at the income tax rates applicable to your
income. In a nutshell, capital gains from debt mutual funds will be taxed in
the same manner as interest earned from bank fixed deposit.

Indexation benefit has been taken away from gold and international mutual
fund schemes as well.

Also Read: Indexation benefit removed from these debt mutual funds

8. Marginal tax relief for small taxpayers

The government has offered marginal relief benefit to small taxpayers under
the new tax regime. As per the income tax law, an individual opting for the
new tax regime in FY 2023-24, will be eligible for marginal relief provided
taxable income exceeds Rs 7 lakh.

The marginal relief will kick in when there is a marginal increase in income
beyond Rs 7 lakh leading to higher tax out go than the marginal increase in
income.

Also Read: New tax relief for small taxpayers

9. TDS on online gaming winnings

The government has removed the threshold earlier available for the deduction
of tax from online game winnings. Till March 31, 2023, the TDS on winning
amounts from online game was applicable if the winnings amount exceeded
Rs 10,000. However, from April 1, 2023, every rupee earned from playing
online games will be subjected to TDS. The TDS will be deducted at 30 per cent
on net winnings amount (i.e., online winnings amount less of entry fee paid).
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Also Read: TDS threshold on online game winnings removed

Also Read: TDS on online game winnings effective from April 1

10. Limit on tax-free proceeds from life insurance policies (except Ulips)
Budget 2023 has put a limit on the tax-free proceeds one can get from life
insurance policies (except Ulips). As per the announcement made, if the total
amount of premium paid on life insurance policies (other than Ulip) exceeds
Rs 5 lakh in a financial year, then maturity proceeds will be taxable. However,
taxation will be applicable for insurance policies bought on or after April 1,
2023.

For life insurance policies purchased till March 31, 2023, the life insurance
proceeds will continue to be tax-free irrespective of the premium amount
paid.

Also Read: Tax free incomes from life insurance policies restricted

Also Read: Maturity proceeds from life insurance policies become taxable in
this case

11. Limiting capital gains from property sale to Rs 10 crore

The government has put the limit on the maximum deduction that can be
claimed from capital gains arising from sale of residential property under
Section 54 and Section 54F. Under these two sections, an individual can claim
tax exemption on the capital gains arising from sale of residential house,
provided the capital gains are invested in another house property.

Till FY 2022-23, there was no limit on the amount of capital gains that can be
claimed as exemption by buying another residential property. However, from
April 1, 2023, the maximum amount of capital gains exemption that can be
claimed is Rs 10 crore.

Apart from this, the government has also put a cap on investment in Capital
Gains Account Scheme. The new law will come into effect from April 1, 2023
for FY 2023-24 and future financial years.

Also Read: Capital gains deduction from house property capped at Rs 10

crore

Also Read: Investment limit in CGAS capped at Rs 10 crore

12. Tax exemption limit on leave encashment hiked for non-government

employees
The government has hiked the tax exemption limit on leave encashment for
non-government employees. Earlier, the maximum amount for tax exemption
was Rs 3 lakh which was fixed in 2002. Now the maximum limit has been
hiked to Rs 25 lakh.

Also Read: Tax exemption on leave encashment hiked to Rs 25 lakh

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13. Lower TDS on EPF withdrawal in certain cases

TDS on EPF withdrawal has been reduced to 20% from 30% in certain cases. As
per the announcement made in Budget 2023, tax on EPF withdrawals, where
PAN is not available, has been reduced to 20%. The new TDS law will come
into effect from April 1, 2023.

Do note that TDS on EPF withdrawal is applicable if the withdrawal is made

before the completion of five years. If the EPF withdrawal is made after the
completion of five years, then TDS is not applicable.

Also Read: TDS on EPF withdrawals reduced in these cases

14. Relief for on higher TDS for non-ITR filers

Budget 2023 has offered relief to certain non-ITR filers from higher TDS. The
relief is offered to those individuals who are not obligated to file ITR. The
definition of 'Specified Person' under section 206AB and section 206CCA has
excluded the individuals who are not required to file ITR. Hence, from April 1,
2023, an individual who is not required to file ITR will not be subjected to
higher TDS.

Also Read: Relief for non-ITR filers from higher TDS

15. Limit hiked under presumptive scheme

The government has hiked limit under presumptive scheme for professionals
and self-employed individuals subject to certain conditions. As per the
announcement, professionals and self-employed individuals having gross
receipts of up to Rs 75 lakh will be eligible to opt for presumptive taxation
scheme. However, this limit will be applicable only if their total cash proceeds
does not exceed 5% of the total receipts. In case of MSMEs, the presumptive
taxation limit has been to Rs 3 crore.

Also Read: Presumptive taxation limit hiked for professionals, self

employed

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