1) New income tax regime to be default regime
starting, 1 april 2023, the new income tax regime will act as the default tax regime. tax assessors will still be able to choose from the prior regime. salaried and pensioners: the new system’s standard deduction for taxable income exceeding rs.15.5 lakhs is ₹52,500.
2) Tax rebate limit raised to ₹7 lakh
the enhancement of tax rebate limit to ₹7 lakh from ₹5 lakh means that the person whose income is less than ₹7 lakh need not invest anything to claim exemptions and the entire income would be tax-free irrespective of the quantum of investment made by such an individual.
3) Standard Deduction
there is no change in standard deduction of ₹50000 provided to employees under old tax regime. for pensioners, the finance minister announced extending the benefit of standard deduction to new tax regime.
4) Changes in Income tax slabs
the new tax rates in old tax regime are
0-3 lakh – nil
3-6 lakh – 5%
6-9 lakh- 10%
9-12 lakh – 15%
12-15 lakh – 20%
above 15 lakh- 30%
5) LTA
the leave encashment for non government employees is exempt up to a certain limit. this limit was ₹3 lakh since 2002 and is now increased to ₹25 lakh
6) no LTCG tax benefit on these mutual funds
from april 1, investments in debt mutual funds will be taxed as short-term capital gains. the move would strip investors of the long term tax benefits that had made such investments popular.
7) Market Linked Debentures (MLDs)
also, investment in market linked debentures (mlds) post april 1 will be short term capital assets. no grandfathering of earlier investments.
8) Life Insurance Policies
proceeds from life insurance premium over the annual premium of ₹5 lakh would be taxable from new financial year i.e. from 1st april.
9) Benefits to Senior Citizens
the maximum deposit limit for senior citizen savings scheme will be increased to ₹30 lakhs from ₹15 lakhs.
the maximum deposit limit for monthly income scheme will be increased to ₹9 lakhs from 4.5 lakhs for single accounts and ₹15 lakhs from ₹7.5 lakhs for joint accounts.
10) Physical gold conversion to e-gold receipt not to attract capital gains tax
while presenting budget 2023, fm said there will not be any capital gain tax if physical gold is converted to an electronic gold receipt (egr) and vice versa. this will be effective from 1 april 2023.