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, startup, MSME, LIC, TDS, TCS, EPF, 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.
|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%|
Budget 2023 announced on Feb 1st 2023 introduced new tax slabs for new IT Regime to make it attractive.
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).
Marginal Relief has been introduced in New Tax Regime w.e.f FY 2023-24.Marginal Relief under New tax Regime means the tax payable should not exceed the income that exceeds Rs 7 lakhs.
For Example : Mr Ram has a net taxable income of Rs 715000 for FY 2023-24. He wants to opt for New Tax Regime. In this case, he is not eligible for rebate u/s 87A as his income exceeded Rs 7 lakhs. He is required to pay a tax of 26500(excluding Edu cess) . In this case, the income exceeding Rs 7 lakhs (7,15,000-7,00,000=15000) is less than the tax payable of Rs 26500. Hence the marginal relief is applicable on his taxes payable for FY 2023-24
After applying marginal relief, his tax payable is 15000 (excluding educ.cess) which we will be a benefit to Mr Ram
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
Generally, Securities Transaction tax (STT) is levied on every stock market transaction. To control the trading in Derivative contracts like futures and options, STT has been increased from 01 st April 2023.
|S.No||Type of Derivatives||Upto 31st March 2023||From 01 st April 2023|
|1||Futures||Rs 1000 on a turnover* of Rs 1 crore||Rs 1,250* on a turnover of Rs 1 crore|
|2||Options||Rs 1700 on a trading* turnover of Rs 1 crore||Rs 2100* on a turnover of Rs 1 crore|
*Turnover refers to Trading Turnover and not the turnover computed as per Income Tax Rules.
The rate of TDS on payments of Royalty and Fees from Technical services to Foreign Companies will be increased to 20% from 10% w.e.f 01st April 2023
Earlier the tax rate as per Income Tax Act is 10% and DTAA is 15% and the companies used to take the benefit of Income Tax Act for deduction of TDS on payments to Foreign Companies. Now the rate of TDS as per DTAA is beneficial
Budget 2023 has amended the threshold of Rs 10,000 on winnings from online gaming, lottery etc. W.e.f 01st April 2023 there is no threshold for the TDS deduction and TDS needs to be deducted on net winnings at the end of the financial year.
The due date for linking of PAN with Aadhar is extended to 30th June 2023 from 31st March 2023
Non Resident Indians (NRI's) who dont have PAN or who are not required to obtain are required to file form 10F manually by 30th September 2023. This due date was extended from March 31 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.