REVISED NEW INCOME TAX REGIME - WEF 01 APR 2023

INCOME TAX REVISED NEW REGIME FOR FY-2023-24

REVISED NEW INCOME TAX REGIME - WEF 01 APR 2023

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**HOW IT MAY IMPACT OUR TAX SAVING INVESTMENTS**

Revised slabs for Income Tax were announced during the Budget Speech by the Finance Minister on 01 Feb 2023 to make the scheme more popular. The high lights of the same are given in the succeeding paragraphs. It may be an indication of future deductions for Income Tax.

The new regime has been modified to be more beneficial than the old regime for a tax payer with applicable deductions limited to Rs 2.5 lakhs. if that be so why should any one invest in ..........    CONTD 

the tax saving instruments and lock up their money for a longer period. While filing the return one needs to be sure as to which option viz New or the Old Regime, is more beneficial to him/her. For this exact calculations must be done for both the regimes and then only decision be taken.

In order to help our members our team has devised a simple on line calculator right here as under to instantly show the results of likely income tax based on your age, gross income and the authorised deductions under the Old regime. 

There are, however, few deductions which are also allowed under the New Regime but all these apart from the deduction under Sec 57iii for family pensioners (Rs 15000 or 30% of the basic family pension which ever is less)  allowed under both regimes are not applicable to pensioners or the salaried individuals.  

Members may take their decisions on their tax saving investments for the Financial year starting on 01 Apr 2023, based on the results displayed by  the calculator.

Old Regime vis-à-vis New Regime as proposed by Finance Bill, 2023 from Income Tax India

Finance Minister Nirmala Sitharaman has in Budget 2023 announced slew of changes in income tax slabs under the new tax regime. The key changes announced on February 1,2023, are:

Changes in the income tax slabs under the new tax regime

Standard deduction introduced for salaried individuals, pensioners under the new tax regime

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* Basic exemption limit hiked to Rs 3 lakh from Rs 2.5 lakh under the new tax regime

* Highest surcharge rate reduced to 

25% from 37% under the new tax regime

* Rebate under Section 87A increased to taxable income of Rs 7 lakh under the new tax regime from Rs 5 lakh earlier. This would mean that from 

FY 2023-24,individuals having taxable incomes up to Rs 7 lakh and opting for the new tax regime will effectively pay zero taxes. The new tax regime would be the default option for taxpayers. However, an individual can choose to opt for the old tax regime. 

*However under the old tax regime there is no change to Rs 5 Lakhs as the limit for No Income tax (REBATE UNDER SEC 87(A)).       

REVISED TAX SLABS UNDER NEW REGIME AS ANNOUNCED IN THE BUDGET 2023 

 

Do note that these changes will be applicable from April 1, 2023, for FY 2023-24. So, in April 2023, when you submit the investment declarations to your employer for calculation of taxes on salary for FY 2023-24, your employer will assume that you have opted for the new tax regime unless you specify otherwise.

However, while filing income tax returns for FY 2022-23 (ending on March 31, 2023) or AY 2023-24, you will continue to use the existing new income tax regime or old taxr egime, depending on what you had chosen.

 

Here are the income tax slabs for FY 2022-23 that you will need to file income tax return this year.

Income tax slabs under existing new tax regime for FY 2022-23

Income tax slabs under the old tax regime for FY 2022-23

 Cess will be applicable at 4% on the income tax payable for FY 2022-23. Further, surcharge will be applicable on taxable incomes above Rs 50 lakh. A rebate under Section 87A will be available in both tax regimes for taxable incomes up to Rs 5 lakh for FY 2022-23.

DEDUCTIONS PERMITTED OR NOT-PERMITTED UNDER REGINMES.

Allowances which are allowed as exempted under both regimes.

1. Any allowance granted for meeting the cost of travel on tour or transfer;

2. Any allowance, whether, granted

1. granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty. 

2. Any allowance granted for meeting the expenditure incurred on conveyance in the performance of duties of an office or employment of profit if the free conveyance is not provided by the employer; and

3. Transport allowance granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with a disability of lower extremities, to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty.

4. Deductions allowed under Secs. 80CCH(2), 80CCD(2), 80JJAA, family pension deduction under section 57(iia)

Following are not allowed to be deducted in new regime:

1. Exemption with respect to travel concession or assistance as covered in section 10(5);

2. HRA exemption as covered in section 10(13A);

3. Any other allowance as covered in section 10(14) or section 10(17);

4. Entertainment allowance and professional tax as covered in section 16(ii) and section 16(iii) respectively

Revised Tax Slabs under New Tax Regime

Income tax slabs (In Rs)

Income Tax Rates (%)

 

For Individual/ HUF/ AOP/ BOI/ Artificial Juridical Person (AJP) 

as per section 115BAC proposed by Finance Bill, 2023

TAX CALCULATOR OF THE ITAX DEPT:- 

 The Income Tax Department has brought out a detailed Tax Calculator for the Financial Year 2023-24, which is also made available for our readers here. 

Please click the following link to open the Departmental Calculator

Take your decision with regard to the Option to be taken by you after you have calculated your tax liability under both the regimes.

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