Home > Income Tax > Help Center > Tax Changes in FY 2023-24Last Updated: Feb 19th 2023
Beginning on 1 April 2023 (FY 2023-24), new Income tax, GST, and company compliance regulations are in effect. Changes to Income Tax, GST, and other tax rules, including New regime, slab changes, surcharge, and capital gains, among others.
Budget 2023 has proposed the changes in New Tax Regime only w.e.f 1st Apr 2023. These rules are applicable from AY 2024-25 (FY 2023-24). The slab rates are as follows.
S.No | Slab | Tax Rates |
---|---|---|
1 | Upto Rs 3,00,000 | Nil |
2 | From Rs 3,00,001 to Rs 6,00,000 | 5% |
3 | From Rs 6,00,001 to Rs 9,00,000 | 10% |
4 | From Rs 9,00,001 to Rs 12,00,000 | 15% |
5 | From Rs 12,00,001 to Rs 15,00,000 | 20% |
6 | More than Rs 15,00,000 | 30% |
New Budget 2023 announced on Feb 1st 2023 introduced new tax slabs for new IT Regime to make it attractive.
Refer Difference between Old Tax Regime and New Tax Regime
Also refer Old vs New Tax Regime | Explained for Salaried & Business Tax Payers
Rebate u/s 87A is increased under New Tax Regime. The taxpayers having income upto Rs 7 lakhs are not required to pay any taxes. The maximum rebate under New Tax Regime is Rs 25,000. This is applicable from AY 2024-25 (FY 2023-24).
The highest surcharge rate of 37% is reduced to 25% under New Tax Regime. The taxpayers with income of more than 5 crore will be paying 25% surcharge instead of 37% under New Tax Regime.
Learn more on Surcharge at Guide On Income Tax Surcharge Slab Rates
There is no change in standard deduction of Rs 50000 provided to employees under Old Tax Regime. But Rs 50000 standard deduction is applied to salaried employees or pension income holders under the new tax regime. This is new compared FY 2022-23.
The rationale behind such inclusion is to encourage taxpayers choosing new tax regime. New Tax slabs under new tax regime is beneficial for taxpayers whose income is up to Rs. 18L. To make the new tax regime attractive, Govt has introduced standard deduction of Rs. 50000. Standard deduction and new tax regime for the most part, does not require any bills to be submitted to the employer for the exemptions.
Budget 2023 increases the threshold under presumptive scheme for MSME's u/s 44AD from Rs 2 crores to Rs 3 crores and for professionals u/s 44ADA from Rs 50 lakhs to Rs 75 lakhs. However, cash receipts should not be more than 5%.
Conversion from physical gold to electronic gold or vice versa will not be considered as transfer and will not attract any capital gain tax w.e.f 1st Apr 2023
Capital Gain Re-Investment in house property u/s 54 and 54F is limited to Rs 10 crores w.e.f 1st Apr 2023. This impacts very few people in the country.
W.e.f 01st Apr 2023, if aggregate of premium for life insurance policies issued on or after 01st Apr 2023 is above Rs 5 lakhs, income from only those policies with aggregate premium upto Rs 5 lakhs shall be exempt.
Leave Encashment exemption on retirement of non-government salaried employees is increased to Rs 25 lakhs from Rs 3 lakhs w.e.f 1st Apr 2023
TDS Rate on EPF withdrawal in Non-PAN cases is reduced to 20% from 30%. This will be applicable from 01st Apr 2023
Observation: It is interesting to note that the government has not extended the benefit, despite the fact that many individuals plan to invest in electric vehicles in order to receive a tax credit. This may be a tradeoff to reintroduce a much more favourable tax regime.
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