Every earning individual or business has to obey the Income Tax Rules to continue sustaining a legitimate business. Any fraudulent activity is punishable under Income Tax Acts, according to the type of offence. An individual or a business is penalized and even the GST registration can be cancelled, in the worst-case scenario. Hence, to avoid any tenacious situation which can affect your business negatively, you must know about all the major rules and changes related to them at your fingertips. But if you are unaware to this day, don’t worry we have created this blog to inform you about the 10 major changes in Income Tax Rules that will be in effect from April 1, 2023.
List of 10 Major Changes in Income Tax Rules in Effect From April 1, 2023:
1. Revised or New Income Tax Regime in Effect by Default
Coming into effect from April 1, 2023, the new regime introduced will be in effect by default. “The new system’s standard deduction for taxable income exceeding Rs.15.5 lakhs is ₹52,500. The government in Budget 2020-21 brought in an optional income tax regime, under which individuals and Hindu Undivided Families (HUFs) were to be taxed at lower rates if they did not avail of specified exemptions and deductions, like house rent allowance (HRA), interest on a home loan, investments made under Section 80C, 80D and 80CCD,” mentioned livemint.
2. ₹7 Lakh is the New Tax Rebate Limit
Under the new tax regime, the tax rebate limit was increased up to ₹7 lakhs from the previous limit of ₹5 lakhs. This means the person having income exceeding this limit will have to pay income tax as per the applicable tax slab.
3. Standard Deduction
“There is no change in the standard deduction of ₹50000 provided to employees under the old tax regime. For pensioners, the finance minister announced extending the benefit of the standard deduction to the new tax regime. Each salaried person with an income of ₹15.5 lacks or more will benefit by ₹52,500,” mentioned live mint.
4. Revised Income Tax Slabs
- 0-3 lakh – nil
- 3-6 lakh – 5%
- 6-9 lakh- 10%
9-12 lakh – 15%
- 12-15 lakh – 20%
- above 15 lakh- 30%
Encashed leaves for non-government workers are exempted up to a certain limit. The previous limit was ₹3 lakh since 2002 and the revised limit is ₹25 lakh.
6. LTCG Tax Benefits Revoked for Mutual Funds
From April 1, 2023, “the 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.”
After April 1, 2023, the investments made in Market Linked Debentures (MLDs) will be counted as short-term capital assets. This will create a negative effect on the mutual fund market.
8. Life Insurance Policies
Life insurance annual premiums exceeding the limit of ₹5 lacks will be taxable from the new financial year beginning from April 1, 2023.
9. Senior Citizen Benefits
The maximum contribution limit for Senior Citizen Savings Scheme is now increased to ₹30 lacks from ₹15 lacks.
“The maximum deposit limit for the 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.”
Also read:Still haven’t linked your PAN and Aadhaar card? Read more – What will happen if you don’t link?
10. No Capital Gains Tax in Gold Conversion
“While presenting Budget 2023, Sitharaman 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.”