Taxpayers Alert: These 10 income tax changes will be applicable from April 1
Income Tax: As the new financial year is about to start from April 1, there are major changes in the income tax that will come into effect. From changes in the income tax slab to the latest rule of no Long-Term Capital Gain (LTCG) benefit on debt mutual funds, here are 10 big changes that will come into force from April 1.
1. No LTCG benefit on debt mutual fund
The government recently scrapped LTCG—tax applied on long-term gains benefit on debt mutual funds which will be applied to investors who invest in debt mutual funds after March 31.
2. Default Tax regime
The New Tax Regime will become the default income tax regime from the beginning of the new financial year. However, taxpayers will still have a choice to toggle and select between the old tax regime and the new tax regime.
3. Tax rebate limit extended
The government extended the tax rebate limit from Rs 5 lakh to Rs 7 lakh in Budget 2023. A tax rebate is a refund that taxpayers are eligible for if the taxes paid by them exceed their tax liability. Simply put, taxpayers with an income of up to Rs 7 lakh in a financial year 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.
4. Standard deduction
Under the new tax regime, a salary exceeding Rs 15.5 lakh will get a standard deduction– a flat deduction from the gross salary, of Rs 52,500. For pensioners, the finance minister has announced the extension of the benefit of the standard deduction in the new tax regime.
5. Tax slab changes
In Budget 2023, Finance Minister Nirmala Sitharaman announced a new break up for tax slabs under the New Tax Regime:
0-3 lakh – nil
3-6 lakh – 5%
6-9 lakh- 10%
9-12 lakh – 15%
6. LTA
The government has hiked the tax exemption on leave encashment on the retirement of non-government salaried employees to Rs 25 lakh from Rs 3 lakh.
7. Market-linked debentures (MLD)
Market-linked debentures will be taxed under short-term capital gains – a tax levied on capital gains from the sale of an asset held for a short period.
8. Life insurance policies
Maturity proceeds from life insurance premium which exceeds Rs 5 lakh will be taxable from April 1. This new income tax rule will not be applied to ULIP (Unit Linked Insurance Plan) – an insurance plan that offers the dual benefit of investment to fulfill your long-term goals, and a life cover for financial protection.
9. Gold to e-gold receipt conversion
Physical gold conversion to e-gold receipt will not attract capital gains tax.
10. Advantages to Senior Citizen
The maximum deposit limit for the senior citizen savings scheme will be increased to Rs 30 lakh from Rs 15 lakh.
The maximum deposit limit for the monthly income scheme will be increased to Rs 9 lakh from 4.5 lakh for single accounts and Rs 15 lakh from Rs 7.5 lakh for joint accounts.
Source: Zeebiz
