The start of the new fiscal year overlapped with the implementation new income tax laws for all taxpayers. The rules governing income tax are changing greatly as of right now. The new tax system is in the spotlight, and many different tax benefits that are being provided somewhere and taken away somewhere are also being discussed. We will inform you of all such income tax regulations that will apply to you as of right now.
1. The new tax rule is now the default tax rule.
As of right now, the new revenue system is the standard one. You will now have to select the old tax system separately if you want to submit your tax return in the old format, which is now the default format on the ITR portal. You will be able to submit taxes under the previous tax system. The previous tax system, including allowances for investments and HRA, has stayed the same. The new tax system will deduct taxpayers paying TDS based on their tax bracket, so you must carefully choose your tax bracket and pay your taxes.
2. Change of Tax slabs in the new tax rule.
The revenue slab has been decreased from seven to six under the new tax system. Up to Rs 3 lakhs of revenue is now tax-free. Income up to Rs 2.5 lakh is tax-free under the previous tax system. Tax rates are:
>> 5% on payments between 3 lakhs and 6 lakhs.
>> 10% between 6 lakhs and 9 lakhs.
>> 15% between 9 lakhs and 12 lakhs.
>> 20% between 12 lakhs and 15 lakhs.
>> 30% over 15 lakhs.
3. Rebate will be available under 87A in the new tax rule.
The exemption threshold in the new tax system has been raised under Section 87A. Those with incomes up to 7 lakh rupees will no longer be subject to tax. The most you can get back is Rs 25,000. Even if they do not claim exemptions, those with revenue up to Rs. 7 lakhs will not be required to pay tax. In addition, the Finance Bill has been changed so that people making income slightly above the Rs. 7 lakhs tax-free threshold will only be required to pay tax on the extra payment.
4. The standard deduction will be available for the first time.
The advantage of a standard deduction of Rs 50,000 has also been suggested for the first time under the new tax system. It was previously only accessible under the previous revenue system. Salary workers and retirees who choose the new tax structure will also receive a Rs 50,000 rebate.
5. Tax Surcharge.
It has also been declared to lower the high surcharge in Budget 2023. The 37% tax increase is now only 25% as of today. Taxpayers making more than 5 crores per year will now be charged a 25% fee.
6. Exemption on Leave Encashment.
The maximum amount of leave that non-government salaried workers can redeem has been raised from 3 lakhs to 25 lakhs.
7. Taxation on Life Insurance.
Such insurance policy income given after April 1, 2023, for which you pay an annual premium of more than 5 lakhs, will be subject to taxation. That implies that you must pay tax on it.
8. Taxation on Mutual Funds.
Long-term capital gains tax is no longer available to debt mutual funds with a stock exposure of less than 35%. Instead, you must pay small-term capital gain tax on them if you keep them for over three years. Additionally, it will be charged based on your tax bracket.
9. Senior Citizen Saving Scheme Senior.
Compared to the earlier deposit limit restrictions of Rs 15 lakhs, now senior citizens can deposit up to Rs 30 lakhs under the senior citizen savings scheme. Additionally, the maximum deposit has been increased to Rs 9 lakhs from Rs 4.5 lakhs for the monthly income scheme for single accounts. However, the limits have been raised to Rs 15 lakhs from Rs 7.5 lakhs.
10. Taxation on House Property.
Taxpayers previously had the right to tax breaks under sections 54 and 54F for selling any residential property or capital asset and using the profits to purchase a new home. However, as of right now, this incentive's maximum amount is 10 lakhs. Consequently, you will be required to pay tax at a rate of 20% on any sum over this.
11. Limit raised under 44AD and 44ADA.
The threshold for MSMEs under presumptive plan 44AD has been raised from 2 crores to 3 crores. In contrast, it has been raised for professionals under 44ADA from 50 lakhs to 75 lakhs. The monetary receipt, however, should be at most 5%.
12. Taxation on Gold Conversion.
From April 1, you won't have to pay capital gains tax on any exchanges of real gold for electronic gold or vice versa. On gold, there is a long-term capital gains tax to be paid. The LTCG regulations will apply if you sell it after the conversion.
13. Taxation on Online Gaming.
Online gambling has been included in the taxation system. As a result, the revenue from online gaming, whether in the form of gift cards, cash, or anything else, will now be subject to TDS at a rate of 30% under the new section 115BBJ.