Many income tax rules will change especially starting with the new fiscal year 2023–2024. From April 1, there will be many significant changes, such as new tax slabs to raise the tax limit and eliminating LTCG tax benefits for debt mutual funds.
The new income tax rule will be the default rule.
The new tax system will function as a default tax system starting on April 1. Taxpayers will still have the option of using the outdated system, though.
7 lakh tax limit.
In Budget 2023, the government would be eligible for tax exemption on income up to Rs 7 lakh under the new tax system. However, this exemption will not be accessible if you pay your taxes using the outdated system. This rules will come into effect from April 1.
Standard deduction.
The standard deduction stays the same. A standard deduction of Rs. 50,000 has been preserved from the previous tax system. So on an income of Rs 15.5 lakh, the standard deduction for seniors will be Rs 52,500.
Change in income tax slab.
The tax rate under the new tax law is 0% for income between 0 and 3 lakhs, 5% for income between 3 and 6 lakhs, 10% for income between 6 and 9 lakhs, 15% for income between 9 and 12 lakhs, and 30% for income beyond 15 lakhs.
Additionally, the LTA limit is rising. Since 2002, non-government employees' maximum leave encashment has been Rs 3 lakh; now, it is Rs 25 lakh.
Tax on debt mutual funds.
As of April 1, debt mutual funds will no longer be eligible for LTCG tax benefits. The tax on short-term capital gains will apply to investments in debt mutual funds starting on April 1.
Market linked debenture.
Market-linked debentures will become short-term capital assets as of April 1. Before this, the mutual fund sector would suffer as the grandfathering of investments ends.
Life insurance policy.
Beginning on April 1, 2023, income from biography insurance premiums over Rs 5 lakh per year will be subject to tax.
Benefits to Senior Citizens
From April 1, the Senior Citizen Saving Scheme's investment limit has been raised from Rs 15 lakh to Rs 30 lakh.
No tax on e-gold?
The capital gain won't be taxed if physical gold is transformed into an e-gold receipt. These regulations will likewise take effect on April 1, 2023.