Income Tax Rules: From April 1, 2023, there is a change in the rules ranging from new tax slabs to tax on debt mutual funds and limit increase under the new tax regime.
Income Tax Rule Change: From the new financial year 2023-24, there is going to be a big change in many rules related to income tax. Many major changes like new tax slabs to increase in tax limit and no LTCG tax benefits on debt mutual funds are taking place from 1st April.
The new income tax regime will be the default regime
From April 1, the new tax system will work like a default tax regime. However, taxpayers will be able to choose the old system for paying tax.
7 lakh tax limit
Under the new tax regime, the government can get tax exemption on income up to Rs 7 lakh in Budget 2023. If you choose the option of paying tax through the old system, then this exemption will not be available. This rule will be applicable from 1 April.
Standard deduction
There is no change in the standard deduction. Under the old tax regime, a standard deduction of Rs 50,000 has been kept. However, for pensioners, the standard deduction will be Rs 52,500 on an income of Rs 15.5 lakh.
Change in income tax slab
Under the new tax regime, the tax slab is zero on 0 to 3 lakh, 5 percent on 3 to 6 lakh, 10 percent on 6 to 9 lakh, 15 percent on 9 to 12 lakh and 30 percent on above 15 lakh.
LTA limit is also increasing. Leave encashment for non-government employees was Rs 3 lakh since 2002, which has been increased to Rs 25 lakh.
Tax on debt mutual funds
LTCG tax benefits will not be given on debt mutual funds from April 1. That is, from April 1, investment in debt mutual funds will come under short term capital gain tax.
Market linked debenture
From April 1, investments in market linked debentures will be short term capital assets. Prior to this the grandfathering of investments will end and the mutual fund industry will be negatively affected.
Life insurance policy
Income from biography insurance premium in excess of Rs 5 lakh annual premium will come under tax from the new financial year i.e. April 1, 2023.
Benefits to Senior Citizens
Under the Senior Citizen Saving Scheme, the investment limit has been increased from Rs 15 lakh to Rs 30 lakh, which will be applicable from April 1.
No tax on e-gold?
If physical gold is converted into e-gold receipt, then capital gain will not be taxed. These rules will also be effective from 1 April 2023.
