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.
- New Tax Slab rates in New Tax Regime
- Rebate u/s 87A under New Tax Regime
- Surcharge
- Standard deduction under New Tax Regime
- Increase in Threshold for MSME's and Professionals u/s 44AD and 44ADA
- Startup Benefits
- Benefits to Senior Citizens
- Conversion of Gold to Electronic Gold receipt
- Capital Gain Tax
- Life Insurance Policies
- Leave Encashment Exemption
- TDS on EPF for Non PAN Cases
- Tax rules that will expire on March 31, 2023
1. New Tax Slab rates in New Tax Regime
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.
New Tax Regime
| 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% |
based on latest rules from Budget 2023
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
2. Rebate u/s 87A under New Tax Regime
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).
3. Surcharge
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
4. Standard deduction under New Tax Regime
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.
Rationale behind increase in Standard deduction under New Tax Regime
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.
5. Increase in Threshold for MSME's and Professionals u/s 44AD and 44ADA
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%.
6. Startup Benefits
- The Period of incorporation of eligible start-up is extended by 1 more year i.e., 31st Mar 2024. The start-ups incorporated upto 31st Mar 2024 can avail the Tax benefits.
- Also, the benefit of carry forward of losses on change of shareholding of start- ups is extended to 10 years from 7 years.
7. Benefits to Senior Citizens
- The maximum deposit limit for senior citizen savings scheme will be increased to Rs 30 lakhs from Rs 15 lakhs.
- The maximum deposit limit for monthly income scheme will be increased to Rs 9 lakhs from 4.5 lakhs for single accounts and Rs 15 lakhs from Rs 7.5 lakhs for joint accounts.
8. Conversion of Gold to Electronic Gold receipt
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
9. Capital Gain Tax
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.
10. Life Insurance Policies
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.
11. Leave Encashment Exemption
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
12. TDS on EPF for Non PAN Cases
TDS Rate on EPF withdrawal in Non-PAN cases is reduced to 20% from 30%. This will be applicable from 01st Apr 2023
13. Tax regulations that will expire on March 31, 2023
- Section 80 EEB : The last date to purchase an electric vehicle and take the interest benefit on loans is 31st March 2023. This benefit is not available for the purchase of electric vehicles on loan from 1st April 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.
- The due date for filing updated income tax returns for FY 2019-20 (AY 2020-21) is March 31st 2023. w.e.f 1st April 2023, taxpayers cannot file AY 2020-21 income tax returns
- The taxpayers who wish to convert to composition schemes from regular GST can convert before 31st March 2023. W.e.f 1st April 2023, they cannot convert to composition scheme
- PAN and Aadhaar should be linked by March 31 2023. w.e.f 01st April 2023, PAN will become inoperative
- Advance Tax for FY 2022-23 needs to be paid before March 31st 2023. w.e.f 01st April 2023, taxpayers needs to pay interest u/s 234B