Income tax: These changes were announced by Finance Minister Nirmala Sitharaman in her budget speech this year.
New Tax Rules: April 1 marks the beginning of the new financial year and is always important in terms of personal finance as most of the budget proposals on income tax come into effect from this day. These changes were announced by Finance Minister Nirmala Sitharaman in her budget speech this year. Let us know about these changes which you must know about.
1. From April 1, 2024, the new tax regime will become the default tax regime. This means that if you have not yet chosen a tax filing method, you will pay tax under the new tax regime.
Changes were made in income tax rules from April 1, 2023. Under the new tax regime, the basic exemption limit was increased from ₹ 2.5 lakh to ₹ 3 lakh. Additionally, the exemption under Section 87A of the Income Tax Act, 1961 was increased from ₹5 lakh to ₹7 lakh. This means that under the new regime, individuals with taxable income up to Rs 7 lakh will not have to pay any income tax as they are eligible for full tax exemption.
The new tax slabs will be as follows:
- Income between ₹ 3 lakh and ₹ 6 lakh will be taxed at 5%
- 10% tax will be levied on Rs 6 lakh to ₹ 9 lakh
- 15% tax will be charged from Rs 9 lakh to Rs 12 lakh
- 20% tax will be imposed on Rs 12 lakh to Rs 15 lakh
- Rs 15 lakh and above will be taxed at 30%
2. The standard deduction of ₹50,000, which was earlier applicable exclusively to the old tax regime, has now been included in the new tax regime. This serves to further reduce taxable income under the new regime.
3. Earlier, there was a surcharge of 37% on income above Rs 5 crore. Now, it has been reduced to 25%. This means that people with income of more than Rs 5 crore will now have to pay less tax if they opt for the new tax regime.
4. The Finance Minister has announced that maturity proceeds from life insurance policies issued on or after April 1, 2023 will be taxable. This tax will be applicable on policies where the total premium is more than ₹5 lakh.
5. Till 2022, non-government employees could get tax exemption on leave encashment up to ₹ 3 lakh. Now this limit has been increased to ₹ 25 lakh.
