10 major income tax rule changes for taxpayers beginning on April 1, 2023 ✅

We hope this email finds you in good health and high spirits. As you may be aware, there are some major income tax rule changes that will be implemented from April 1, 2023. We would like to keep you informed about these changes, so you can plan your finances accordingly.

Here are the 10 major income tax rule changes that will be applicable from April 1, 2023:

1) The new income tax regime will be the default regime :
The new income tax regime will become the default tax regime on April 1, 2023. Tax assessors will be able to continue using the previous regime. Salaried and retired people: The standard deduction under the new system for taxable income exceeding Rs.15.5 lakhs is Rs.52,500.

Individuals and Hindu Undivided Families (HUFs) were to be taxed at lower rates if they did not take advantage of specified exemptions and deductions, such as house rent allowance (HRA), interest on home loan, and investments made under Section 80C, 80D, and 80CCD, under Budget 2020-21. As a result of this, total income increased. Under this, total income up to ₹2.5 lakh was tax exempt.

2) The tax rebate limit has been raised to 7 lakh rupees :
The increase in the tax rebate limit from 5 lakh to 7 lakh means that a person whose income is less than 7 lakh does not need to invest anything to claim exemptions, and the entire income is tax-free regardless of the amount of investment made by such an individual.

3) Usual deduction :
The standard deduction of ₹ 50000 provided to employees under the previous tax regime remains unchanged. For retirees, the finance minister announced that the standard deduction would be extended to the new tax regime. Each salaried person earning 15.5 lakh or more will receive 52,500.

4) Modifications to Income Tax Slabs , The new tax rates are as follows:
0-3 lakh – 0
3-6 lakh – 5%
6-9 lakh- 10%
9-12 lakh – 15%
12-15 lakh – 20%
greater than 15 lakh- 30%

5) LTA :
The leave encashment for non government employees is exempt up to a certain limit. This limit was ₹3 lakh since 2002 and is now increased to ₹25 lakh.

6) Debt mutual funds do not provide LTCG tax benefits :
Investments in debt mutual funds will be taxed as short-term capital gains beginning April 1. The move would deprive investors of the long-term tax advantages that have made such investments popular.

7) Marketable Debentures (MLDs) :
Additionally, investments in Market Linked Debentures (MLDs) after April 1 will be considered short-term capital assets. This means that earlier investments will no longer be grandfathered, and the impact on the mutual fund industry will be slightly negative.

8) Life insurance policies :
Proceeds from life insurance premiums in excess of 5 lakh would be taxable beginning with the new fiscal year, on April 1, 2023. While presenting Budget 2023, Finance Minister Nirmala Sitharaman also stated that the new income tax rule will not apply to ULIPs. (Unit Linked Insurance Plan).

9) Senior Citizens’ Benefits :
The maximum deposit limit for the senior citizen savings scheme will be raised from 15 to 30 lakhs.

10) Physical gold conversion to electronic gold receipt is exempt from capital gains tax :
Mrs.Sitharaman stated during the presentation of Budget 2023 that there will be no capital gains tax if physical gold is converted to an Electronic Gold Receipt (EGR) and vice versa. This will take effect on April 1, 2023.

Avatar photo

By Team WM

WealthMunshi Team comprises finance professionals, writers, editors, and subject matter experts dedicated to delivering accurate and reliable information on personal finance and wealth management. Our goal is to simplify complex financial concepts and industry jargon, making finance accessible to all. With relatable content and practical advice, we empower individuals to make informed decisions and achieve their financial goals. Trust us to provide comprehensive guidance on financial planning, investment strategies, tax optimization, and wealth preservation. Join us on this enriching financial journey and let WealthMunshi be your trusted partner in securing a brighter future.

Leave a Reply

Your email address will not be published. Required fields are marked *