New rules for taxpayers effective from 1st April

Starting the financial year (FY) 2023-24, a new tax regime will be introduced and it will be the default regime to file returns published as highlighted in Hindustan Times. Our Finance Minister, Nirmala Sitharaman announced this in the annual budget speech on 1st Feb. in such scenarios, with the onset of each financial year, the upcoming FY 2023-24 that will begin on April, 1 will see some newly introduced rules for taxpayers. In the 2023 Budget, one of the minister’s announcements pertained to the previous and new income tax regimes.

The minister announced changes to tax slabs under the new regime, adding that taxpayers from this FY will still be able to select the regime under which they want to file their returns and in cases where no choices were made, the default will be set as the new tax regime, she added.

The new tax rules are expected to bring some significant changes coming into effect from 1st April. 2023. These changes will involve the introduction of new rules or reforms to the previous ones. Hindustan Times sister publication Mint, Abhishek Soni, co-founder and CEO of Tax2Win spoke about what citizens need to be aware of the newly introduced rules. Bidding farewell to FY 2022-23 and with the usher of new FY 2023-24, the new rules are going to significantly transform the old glitches of the existing tax regime, he added. As per Abhishek Soni, here are a few points to be noted about the new rules:

1. The increase in the basic exemption limit has been made from INR 2.5 lakh to INR 3 lakh to make the new regime look attractive. The highest rate of 30% will be levied on annual salaries exceeding INR 15 lakh.
2. The reduction in surcharge rate has been reduced from 37% to 25% for those earning over INR 5 crore annually. The new regime, however, said that this 25% rate is for individuals with a yearly income of more than INR 2 crore.
3. Individuals and HUFs (Hindu Undivided Families) can choose between the regimes in every financial year if there is no business income. For these families having a well business income, there will be only one chance to return to the old regime, provided they have opted for the new one.
4. The rebate is available under both, under Section 87A. For those confused about which one to opt for, the Income Tax Department has launched a ‘calculator’. The tax calculator is present on the income tax department’s portal.
5. A standard deduction will be introduced in the new regime as per the proposal, with no changes made from the old one where people will benefit from a standard deduction of INR 50,000.
6. The calculator s introduced to help an assessed decide if the new regime for income tax announced in the Budget 2023, is good or better or not.

Thus, the main highlights of the former tax regime can be listed as an increase in tax rebate limit, raising standard deduction limits for senior citizens, changes in income tax slabs, higher capital gain under Section 24 of the Income Tax Act and some other provisions related to winnings from online games, TDS, gold conversion into cash, etc.