The start of the new financial year on April 1 will bring in ten significant changes to the income tax rules for Indian taxpayers. These changes were announced by Union finance minister Nirmala Sitharaman during the annual budget announcement in February, and they will become effective from the start of the 2023-24 financial year. Here are the ten major changes to the income tax rules that will take effect from April 1:
- The new tax regime will be the default regime for taxpayers who do not state which regime they will be filing their returns under.
- The rebate limit has been raised from ₹5 lakh to ₹7 lakh.
- The standard deduction of ₹50,000 under the old regime has been extended to the new regime as well.
- The income tax slabs have been revised as follows:
- Yearly salary up to ₹3 lakh: Nil
- ₹3 lakh- ₹6 lakh: 5%
- ₹6 lakh to ₹9 lakh: 10%
- ₹9 lakh to ₹12 lakh: 15%
- ₹12 lakh to Rs15 lakh: 20%
- Above ₹15 lakh: 30%
- The limit on encashment of leave travel allowance has been raised from ₹3 lakh to ₹25 lakh.
- Investments in debt mutual funds will be taxed as short-term capital gains, which means long-term tax benefits will no longer be available.
- Investment in market-linked debentures will be considered short-term capital assets.
- Proceeds from life insurance premiums exceeding ₹5 lakh per year will be taxable.
- The deposit limit under senior citizen savings schemes has been raised:
- To ₹30 lakh from ₹15 lakh
- To ₹9 lakh from ₹4.5 lakh for monthly income scheme (single account)
- To ₹15 lakh from ₹7.5 lakh for monthly income scheme (joint account)
- There will be no capital gains tax on the conversion of physical gold to Electronic Gold Receipt or vice versa.
These changes are expected to impact taxpayers differently depending on their income and investments.