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Economic Times | 01 Feb, 2023 | 07:57PM IST
Income Tax Budget 2023 Highlights: Finance Minister Nirmala Sitharaman tweaked the income tax slabs under the new tax regime.
What's new in the new income tax regime
1) Basic exemption limit is hiked from Rs 3 lakh to Rs 2.5 lakh
2) Rebate under section 87A has been hiked from Rs 5 lakh to Rs 7 lakh
3) The income tax slabs under the new income tax regime will be as follows:
- Up to Rs 3 lakh - 0% tax
- Between Rs 3 and 6 lakh - 5% tax
- Between Rs 6 and 9 lakh - 10% tax
- Between Rs 9 lakh and Rs 12 lakh - 15% tax
- Between Rs 12 lakh and Rs 15 lakh - 20% tax
- Above Rs 15 lakh above - 30% tax
4) Standard deduction introduced for salaried and individual taxpayers under the new tax regime
5) Highest surcharge rate reduced from 37 per cent to 25 per cent in the new tax regime
Sitharaman announced a one-time small savings scheme ‘Mahila Samman Saving Certificate’. It will be available for two years. The interest rate has been fixed at 7.5 per cent per annum. The maximum investment limit will be Rs 2 lakh. A partial withdrawal option will also be available.
The maximum investment limit under Senior Citizen Savings Scheme (SCSS) has been hiked from Rs 15 lakh to Rs 30 lakh.
For business establishments required to have Permanent Account Number (PAN), it will be used as a common identifier for all digital systems of specified government agencies, announced Sitharaman in Budget 2023.
Commenting on the announcements of Budget 2023, Sudhakar Sethuraman, Partner, Deloitte India said, "This budget looks promising for middle class taxpayers with enhanced slabs limits. Revisiting the leave encashment exemption in line with prevalent salary levels is much appreciated. One has to be prepared that new tax regime will be focused going forward. Another point on better targeting of tax concessions and exemptions, limit is fixed for capital gain exemption in case of residential house at INR 10 crore; limit is proposed to be fixed on exemption for proceeds from insurance policies. With eased up compliance and simplified process, the budget can be said to meet the hard-working middle-class taxpayers to a considerable extent."
"The Finance Minister has provided a shot in the arm for smaller taxpayers by increasing rebates and ensuring that there is no income tax levied up to Rs 7 lakh in income. In addition, the revised tax slabs under the new tax regime and the extension of the standard deduction will ensure that the salaries class will have a little more cash in hand this coming year to fuel consumption and or investments in India," said Pallav Pradyumn Narang, Partner, CNK, a chartered accountants firm.
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“The Union Budget is growth accretive, fiscally prudent and consumption supportive. The huge emphasis on capital expenditure could be the perfect recipe for a private investment cycle that is already visible. Support for MSME and Agriculture will broad base credit growth. Reasonable Government borrowing numbers will support lower interest rates and the move towards a clutter free new tax regime will significantly spur consumption. Overall, the budget is forward looking and will support an inclusive economy.”
- Dinesh Khara, Chairman, SBI
Income Tax Budget 2023 Highlights: Digilocker services to aid easy loans access, says expert
"The expansion of the government digital certificate depository Digilocker services for the fintech sector is a welcome boost for fintech startups that are aiming to improve credit penetration in the country. Seamless documentation availability through the DigiLocker will aid in easing the loan journey and help availability of loans in interiors of the country," said Aalesh Avlani, Founder, of Credit Wise Capital, a consumer finance Registered NBFC.
Income Tax Budget 2023 Highlights: How digital transaction grew in 2022
Digital payments continue to find wide acceptance. In 2022, they show an increase of 76 per cent in transactions and 91 per cent in value. Fiscal support for this digital public infrastructure will continue in 2023-24.
Income Tax Budget 2023 Highlights: Budget 2023 announces unified filing process
For obviating the need for separate submission of the same information to different government agencies, a system of ‘Unified Filing Process’ will be set up. Such filing of information or return in simplified forms on a common portal will be shared with other agencies as per the filer’s choice, said Budget 2023.
Income Tax Budget 2023 LIVE Updates: What insurance policyholders must know
Budget 2023 announced that for non-ULIP (traditional) insurance policies issued from the new fiscal year, income from only those policies with aggregate premiums up to Rs 5 lakh shall be exempt This is a bit of a dampener for the insurance industry and increasing penetration of insurance and household financial savings in India.
Income Tax Budget 2023 LIVE Updates: Mahesh Shukla, CEO & Founder, PayMe
Finance Minister has brought in several changes in the tax regime, which can be seen as a welcome move for the common people. The government has announced big incentives under the new tax regime and given a big push on the capex. The finance ministry has also brought revisions to the tax structure by reducing the number of tax slabs to 5 and increasing the tax exemption limit to Rs 3 lakh. A low tax regime is always beneficial for the taxpayers since introducing tax cuts and giving more money to the hands of people will eventually boost the country’s economy.
Income Tax Budget 2023 LIVE Updates: PAN common ID for business establishment
For the business establishments required to have a Permanent Account Number (PAN), the PAN will be used as the common identifier for all digital systems of specified government agencies. This will bring ease of doing business, and it will be facilitated through a legal mandate.
Income Tax Budget 2023 LIVE Updates: One-stop solution for identity and address updating, proposes Budget 2023
A one-stop solution for reconciliation and updating of identity and address of individuals maintained by various government agencies, regulators, and regulated entities will be established using DigiLocker service and Aadhaar as foundational identity announced Budget 2023.
Income Tax Budget 2023 LIVE Updates: How a simpler KYC process will help you
“In Budget 2023, it is laudable that the FM has kept improving ease of business right at the centre of her announcements. In the insurance sector, everything hangs by the delicate thread of customer trust. Simpler KYC processes, enhanced DigiLocker services, and an overall push toward digital transactions will go a long way in improving customer experience. This in turn is bound to improve India’s insurance adoption and further accentuate the growth of our economy,” said Sarbvir Singh, President and CEO, of Policybazaar.com
Income Tax Budget 2023 LIVE Updates: KYC process simplified
The KYC process will be simplified adopting a ‘risk-based’ instead of a ‘one size fits all’ approach. The financial sector regulators will also be encouraged to have a KYC system fully amenable to meet the needs of Digital India, announced Budget 2023
Income Tax Budget 2023 LIVE Updates: FM checked all boxes, says, expert
"The Union Budget 2023-24 is a growth-oriented budget and the FM has checked all the boxes – from consumption to capex to spending to middle class to industry. The income tax benefits announced will boost purchasing power for middle-class consumers," said Umesh Revankar, Executive Vice Chairman, of Shriram Finance.
Income Tax Slab Budget 2023 LIVE Updates: TDS rate on EPF withdrawals reduced to 20%
Tax deducted on EPF withdrawals has been reduced to 20 per cent from 30 per cent in non-PAN cases in Budget 2023. Read More
An increase of 66 per cent in the Prime Minister Awas Yojana (PMAY) fund outlay is a step in the right direction, which will not only enhance funding to the lower and affordable housing category, but also is in line with the government's ‘Housing for All’ policy.
- Samyak Jain, Director, Siddha Group
Income Tax Slab Budget 2023 LIVE Updates: Salaried, pensioners to pay nil tax on income up to Rs 7.5 lakh in new tax regime
Post Budget 2023, salaried individuals, pensioners and family pensioners pay no tax on income up to Rs 7.5 lakh under the new tax regime. Know how
Taking it a notch above the expectations of the middle class, the budget has special thrust on women and youth which makes it truly citizen-centric. To remain the fastest growing major economy in the world, it demonstrates the government’s intent to improve a taxpayer’s purchasing power through income tax rebates, enhanced grievance redressal mechanism for direct tax payers and capital deductions from capital gains on investments, while being overall fiscally prudent to address inflation. Further, rolling out a host of initiatives to support domestic industries, the budget sets positive sentiments in placing India in a resilient position amidst a global slowdown.
- Suresh Agarwal, MD & CEO, Kotak Mahindra General Insurance Company
Income Tax Slab Budget 2023 LIVE Updates: Maximum investment limit under MIS hiked
The maximum deposit limit for Monthly Income Account Scheme will be enhanced from Rs 4.5 lakh to Rs 9 lakh for single account and from Rs 9 lakh to Rs 15 lakh for joint account.
Income Tax Slab Budget 2023 LIVE Updates: Key announcements from Budget 2023
Budget decoded for salaried income taxpayers. Read here
Income Tax Slab Budget 2023 LIVE Updates: Govt took action to tame inflation, says FM
You have seen inflation come down, both the CPI and WPI. Action has been taken by the government, we take inflation-related steps when things develop on the ground and in response to it and that has borne results, says Union Finance Minister Nirmala Sitharaman
Income Tax Slab Budget 2023 LIVE Updates: Basic tax exemption limit hiked in new tax regime
Basic tax exemption limit hiked to Rs 3 lakh in new tax regime in Budget 2023. Read More
Income Tax Slab Budget 2023 LIVE Updates: Standard deduction introduced in Budget 2023
Standard deduction of Rs 50,000 to salaried individual, and deduction from family pension up to Rs 15,000, is currently allowed only under the old regime. These two deductions will now be available under new tax regime, announced finance minister Nirmala Sitharaman.
Income Tax Slab Budget 2023 LIVE Updates: Surcharge explained
Surcharge on income-tax under both old regime and new regime is 10 per cent if income is above Rs 50 lakh and up to Rs 1 crore, 15 per cent if income is above Rs 1 crore and up to Rs 2 crore, 25 per cent if income is above Rs 2 crore and up to Rs 5 crore, and 37 per cent if income is above Rs 5 crore. It is proposed that the for those individuals, HUF, AOP (other than co-operative), BOI and AJP under the new regime, surcharge would be same except that the surcharge rate of 37 per cent will not apply. Highest surcharge shall be 25 per cent for income above Rs 2 crore. This would reduce the maximum rate from about 42.7 per cent to about 39 per cent. No change in surcharge is proposed for those who opt to be under the old regime
As was being expected, the FM has proposed various changes in the New tax regime to make it more popular. Out of five major announcements made under personal tax, three proposals have been made for middle class salaried individuals opting for new tax regime which are increase in the rebate under section 87A for people earning taxable income up to Rs 7 lakh, change in tax slab rates and introduction of standard deduction and deduction against family pension, making the new tax regime all the more lucrative.
- Divya Baweja, Partner, Deloitte India
Budget focussed on empowering women, self-help group: FM
Income Tax Slab Budget 2023 LIVE Updates: New income tax regime is now more attractive, says FM
The new income tax regime has now got greater incentives, so that people can unhesitatingly move from the old to the new. We are not compelling anyone. But the new income tax regime is now attractive as it gives greater rebates, said Union Finance Minister Nirmala Sitharaman
Tweaked new tax regime, so more people adopt it: FM Nirmala Sitharaman
Income Tax Slab Budget 2023 LIVE Updates: Old Vs new tax regime post-budget 2023: Who should opt for which income tax regime now
Finance Minister Nirmala Sitharaman revised the income tax slabs under the new income tax regime. To make it attractive among taxpayers, the government has introduced standard deductions for salaried individuals and pensioners under the concessional income tax regime. Further, the basic exemption limit has also been increased from Rs 2.5 lakh to Rs 3 lakh. Read More
Budget 2020 introduced a simplified personal tax regime with effect from assessment year 2020-2021 with the objective of providing relief to taxpayers and simplifying the Income-tax law. However, since the savings under the scheme were not significant, there were not many takers for the scheme. The government has now proposed a revamp of the scheme to make it more attractive by increasing the basic exemption limit under this scheme from Rs 2.5 lakh to Rs 3 lakh, allowing higher rebate of Rs 25,000 for low taxpayers (as compared to Rs 12,500 under the regular regime), allowing taxpayers to claim the standard deduction from their taxable salary up to Rs 50,000 and restricting the surcharge for high taxpayers (taxable income exceeding 5 Crore) to 25 per cent instead of 37 per cent.
- Homi Mistry, Partner, Deloitte India
Income Tax Slab Budget 2023 LIVE Updates: For salaried taxpayers
Income Tax Slab Budget 2023 LIVE Updates: All you need to know about new income tax slabs
Income Tax Slab Budget 2023 LIVE Updates: TDS rate on EPF withdrawals reduced in these cases
Tax deducted on EPF withdrawals has been reduced to 20 per cent from 30 per cent in non-PAN cases in Budget 2023. The reduction in the TDS rate on EPF withdrawal will help individuals whose PAN is not updated with the records in the EPFO. Read more
Income Tax Slab Budget 2023 LIVE Updates: Surcharge reduced: How it will affect you
Saraswathi Kasturirangan, Partner, Deloitte India, explained, "The Finance Minister has proposed to curtail the surcharge at income levels exceeding Rs 5 crore from 37 per cent to 25 per cent under the new tax regime. This will reduce the effective tax rate for individuals in the highest tax slab from 42.744 per cent to 39 per cent. This is a welcome move since moderation of individual tax rates in India would also make the country more attractive for individuals in the region and would prevent the flight of capital abroad."
The Finance Minister Nirmala Sitharaman has presented a distinctive set of measures in the Union Budget 2023-24 with a streamlined focus on rapid, holistic and inclusive economic growth. It is a well-crafted statement of intent, drawn from the success and learnings from the past with the potential to further enhance India’s growth prospects.
- Akash Sinha, Co-founder & CEO, Cashfree Payments
Budget 2023-24 is a well-rounded progressive & inclusive budget. The focus on important parameters like boosting consumption and inclusion is a welcome measure for our growing economy. The government has laid an important thrust on capital Investment which will enhance consumption and create employment, both of which have been important areas of attention, especially post the pandemic
- Chandrashekhar Gosh, MD & CEO of Bandhan Bank
New Income Tax Slab Budget 2023 LIVE Updates: What is the leave encashment rule for non-govt emlpoyees?
If a person is employed in the private sector, their leave encashment following retirement or resignation is taxable as "Income from Salary" under Section 10 (10AA)(ii). However, section 10 of the Income-Tax Act, 1961, provides for some tax exemptions (10AA), according to the income tax department’s website.Any payment received as leave encashment at the time of retirement or on leaving job otherwise shall be exempt up to the least of following amounts Under Section 10 (10AA)(ii). The limit is now increased to Rs 25 lakh from earlier Rs 3 lakh.
New Income Tax Slab Budget 2023 LIVE Updates: Tax exemption on leave encashment on retirement of non-government salaried employees increased
The limit of Rs 3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees has been increased to Rs 25 lakh in Budget 2023.
The budget is indicative of the continued economic growth resolve that the government has underlined via a slew of reforms, rebates and announcements all aimed at turning India into a consumption economy
- Susheel Tejuja, Founder & MD, PolicyBoss.com
Income Tax Budget 2023 LIVE Updates: Life insurance proceeds taxable for premium over Rs 5 lakh
For life insurance policies issued on or after April 1, 2023, the tax exemption on maturity benefits under Section 10(10D) will only be applicable if the aggregate premium paid by an individual is up to Rs 5 lakh.
New Income Tax Slab Budget 2023 LIVE Updates: How hike in presumptive tax will help you
While this measure will provide relief in income tax, with no corresponding measures for reduction of TDS, professionals may continue to face cash constraints due to higher deduction of TDS," said Neeraj Agarwala, Partner, Nangia Andersen India.
New Income Tax Slab Budget 2023 LIVE Updates: Limit for presumptive tax scheme hiked
The limit for the presumptive tax scheme has been increased from Rs 50 lakhs to Rs 75 lakhs. Earlier, professionals with gross receipts of up to Rs 50 lakh were given the option to straightaway offer 50 percent of their gross receipts as taxable income and pay taxes at applicable slab rates. Now, professionals with gross receipts of up to Rs 75 lakh will have the same option.
New Income Tax Slab Budget 2023 LIVE Updates: Will the proposed changes in the new tax regime help the middle-class taxpayers?
Answering to whether the changes in the new tax regime help the middle-class taxpayers, Ankit Jain, Partner, Ved Jain & Associates, a chartered accountant firm said, "The proposed changes in the new tax regime, combined with no changes being made in the old tax regime, may result in the savings sector and social sector becoming the primary losers. The new tax regime does not offer any tax deductions for investments or for donations to charitable organisations, thereby removing any incentives for individuals to continue making investments in mutual funds, insurance, pension schemes, provident funds, or to donate to charitable causes."
New Income Tax Slab LIVE Updates: The Finance Minister has provided a shot in the arm for smaller taxpayers by increasing rebates and ensuring that there is no income tax levied up to 7 lakh rupees in income. In addition, the revised tax slabs under the new tax regime and the extension of the standard deduction will ensure that the salaries class will have a little more cash in hand this coming year to fuel consumption and or investments in India.
- Pallav Pradyumn Narang, Partner, CNK
New income tax slab LIVE Updates: New tax regime will be default now
From April 1, 2023, the new income tax regime will be your default tax regime. If you want to opt old tax regime, you have to separately choose it at the beginning of the financial year.
New Income Tax Slab LIVE Updates: With regards to personal taxation, the Finance Minister proposed the new tax regime as the default system, with no tax applicable for income up to Rs 7 lakh. The basic tax slabs have been revised, providing some relief to taxpayers, and the highest surcharge rate has been reduced to 25 per cent from 37 per cent, offering substantial relief to ultra HNIs. However, the highest tax rate remains unchanged at 30 per cent for income above Rs. 15 lakhs, providing those with income between Rs 15 lakhs and Rs 2 crores with insignificant benefits.
- Ankit Jain, Partner, Ved Jain & Associates
New Income Tax Slab Budget 2023 LIVE Updates: Know about new income tax slab
What's new in the new income tax regime
- Basic exemption limit is hiked from Rs 3 lakh to Rs 2.5 lakh
- Rebate under section 87A has been hiked from Rs 5 lakh to Rs 7 lakh
- The income tax slabs under the new income tax regime will be as follows:
a) Rs 0 to Rs 3 lakh - 0% tax
b) Rs 3 to 6 lakh - 5% tax
c) Rs 6 to 9 lakh - 10% tax
d) Rs 9 lakh to Rs 12 lakh - 15% tax
e) Rs 12 lakh to Rs 15 lakh - 20% tax
f) Above Rs 15 lakh above - 30% tax
- Standard deduction introduced in new tax regime for salaried and pensioners in Budget 2023.
- Further, the new income tax regime becomes default tax regime. However, the individuals will have an option to continue with the old income tax regime
New Income Tax Slabs Budget 2023 LIVE Updates: Big relief for taxpayers
An individual with annual income of Rs 9 lakh will have to pay only Rs 45,000, says FM
New Income Tax Slabs Budget 2023 LIVE Updates: Highest surcharge reduced
"I propose to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime, announces Finance Minister Nirmala Sitharaman
New Income Tax Slab Budget 2023 LIVE Updates: What are the new income tax slabs under new tax regime?
The new income tax slabs under new tax regime
- up to Rs 3 lakh: NIL
- Rs 3 lakh- Rs 6 lakh: 5%
- Rs 6 lakh-Rs 9 lakh: 10%
- Rs 9 lakh-Rs 12 lakh: 15%
- Rs 12 lakh- Rs 15 lakh: 20%
- Over Rs 15 lakh: 30%
Income Tax Budget 2023 LIVE Updates: The rebate under section 87A of new income regime hiked to Rs 7 lakh, says FM
Income Tax Slabs Budget 2023 LIVE Updates: New scheme for women
The maximum investment limit under 'Mahila Samman Saving Certificate' will be Rs 2 lakh. A partial withdrawal option will also be available.
Income Tax Budget 2023 LIVE Updates: FM announces new savings scheme for women
Finance Minister Nirmala Sitharaman has announced a one-time small savings scheme ‘Mahila Samman Saving Certificate’. It will be available for two years. The interest rate has been fixed at 7.5 per cent per annum.
Income Tax Budget 2023 LIVE Updates: Investment limit of Senior Citizen Savings Scheme increased
Senior Citizen Savings Scheme: Maximum investment limit increased from Rs 15 lakh to Rs 30 lakh, announces FM
Income Tax Budget 2023: If income tax relief is given in new tax regime will old tax regime continue?
If media reports that the new tax regime is likely to be made more attractive in the coming budget 2023 prove correct, then it is likely that this may also signal the end of the old tax regime. This appears the logical consequence of sweetening the new 'concessional tax regime' by introduction of a few limited exemptions/tax deductions and/or hiking the basic exemption limit. Read More
Income Tax in Budget 2023 LIVE Updates: Soon, you will be able to update address, identity proof easily via DigiLocker
DigiLocker will now be a one-stop KYC maintenance system for individuals, allowing you to make changes to papers that will be reflected in all of your documents that are linked to digilocker, finance minister Nirmala Sitharaman announced in Budget 2023. Read more
Income Tax Budget 2023 LIVE Updates: PAN to be used as common business ID
For business establishments required to have Permanent Account Number (PAN), it will be used as a common identifier for all digital systems of specified government agencies, announces Finance Minister Nirmala Sitharaman in Budget 2023.
Digilocker will be the one stop KYC maintenance system for individuals: FM
We look forward to more first time home buyers having access to affordable housing by availing credit link subsidy scheme benefits, if the government revises the cap further upwards in the metro cities. The government should introduce tax sops for first-time homebuyers.
- Samyak Jain, Director, Siddha Group
Income Tax Budget 2023 LIVE Updates: Govt won't give any concession to salaried people, says Congress
"We don't think the govt is giving any concession to salaried people. They are announcing the budget only for eyewash schemes. They did the same in previous budgets. This time, focussing on 2024 elections, some schemes and reliefs may be announced," said K Suresh, Congress chief whip in Lok Sabha
Income Tax Budget 2023 LIVE Updates: What first-time homebuyers want from Budget 2023
"Property rates in metro cities are very high and out of reach for most home buyers in the lower property segment. Revising the cap from Rs 45 lakh to 1 crore in metro cities, for home buyers availing the credit link subsidy scheme will immensely benefit customers in the affordable housing category and make housing more accessible to them," said Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Treasurer, CREDAI-MCHI.
"The government should introduce tax sops for first-time homebuyers and re-introducing GST with an input tax credit on under-construction properties that will reduce property rates thereby generating demand among homebuyers," he added.
There should be some tax concessions for first-time homebuyers and re-introducing GST with an input tax credit for under-construction properties that will generate demand among homebuyers.
- Samyak Doshi, Director, Bhoomi Group.
It is important to increase the tax subsidy on housing loans for both the principal and interest from its historical level of Rs 2 lakh and Rs 1.5 lakh. An increase in an existing tax deduction for home loans will offset the increased EMI burden and leave some surplus to spend and boost the Indian economy
- Shrikant Shrivastava, chief risk officer, of IMGC (India Mortgage Guarantee Corporation)
Income Tax Budget 2023 LIVE Updates: Income tax deductions homebuyers get now
Currently, homebuyers can claim an income tax deduction on the interest paid on their home loan under Section 24 (b) of the Income-tax Act, 1961. The maximum amount of deduction that can be claimed is Rs 2 lakh per financial year for a self-occupied property. Homebuyers can also claim income tax deductions on the principal repayment of their home loan under Section 80C of the Income Tax Act. The maximum amount of deduction that can be claimed is Rs 1.5 lakh per financial year. However, various deductions for other investments such as Public Provident Fund (PPF), equity-linked savings schemes (ELSS), life insurance premiums, and Sukanya Samriddhi Scheme are clubbed under Section 80C of the Income-tax Act, 1961.
Read more on Income Tax Slab Budget 2023 Tax Budget 2023 Tax Budget 2023 Updates Tax Budget 2023 Latest Updates Income Tax Budget Budget 2023 Income Tax Union Budget
FAQs
What is new income tax slab? ›
...
New Regime Income Tax Slab Rates for Individual.
| Income Tax Slab | Tax Rate |
|---|---|
| Above Rs.9 lakh - Rs.12 lakh | 15% of the total income |
| Above Rs.12 lakh - Rs.15 lakh | 20% of the total income |
| Above Rs.15 lakh | 30% of the total income |
The new tax regime offers the flexibility to the taxpayer to invest their money as they prefer. With the new scheme, there is no obligatory requirement to invest in tax saving schemes and insurance plans which may not be in alignment with their financial goals.
How do you calculate net taxable income as per new regime? ›The formula for calculating tax percentage is total tax payable divided by the total net taxable income for the financial year. For example- for the financial year 2021-22 the net taxable income is Rs 12,00,000 and the total tax payable is Rs 1,19,000.
Is 80C deduction available in new tax regime? ›No, Section 80C deductions are not available under the new tax regime. How to calculate tax in new regime? From FY 2023-24 (AY 2024-25) onwards, the tax slabs under the new tax regime have been revised, as per the table given in the beginning of this article.
What is the new standard deduction for 2023? ›Like the income tax brackets, the standard deduction gets an annual adjustment for inflation. But next year's bump is one of the biggest yet. The standard deduction is increasing by $900 to $13,850 for singles in 2023 and by $1,800 to $27,700 for couples.
What is the tax slab for 2022 2023? ›Income between ₹5 and ₹7.5 lakh, reduced to 10% tax from 20% Income between ₹7.5 lakh to ₹10 lakh, reduced to 15% from the current 20% Income between ₹10 lakh to ₹12.5 lakh, reduced to 20% from the current 30% Income between ₹12.5 lakh to ₹15 lakhs, reduced to 25% from the current 30%
Is new tax regime better for salaried employees? ›We can see in the above example that the old tax regime is beneficial to Taxpayer 1 as taxes are less by INR 37,440. In case of taxpayer 2, where deductions for HRA and LTA are not applicable, the new tax regime is more beneficial by INR 15,600.
What are the disadvantages of new tax regime? ›...
New regime:
- Non-availability of tax deduction.
- Reduced flexibility in choosing the new regime for those having business income.
- Absence of automatic mechanism of inculcating saving habits.
Hence, without the tax deduction amount claimed, the new regime is much better for taxpayers to save on taxes. But if deductions are included, then old regime is more beneficial.
How much tax will I pay if my salary is 50000? ›If you make ₹ 50,000 a year living in India, you will be taxed ₹ 6,000. That means that your net pay will be ₹ 44,000 per year, or ₹ 3,667 per month. Your average tax rate is 12.0% and your marginal tax rate is 12.0%.
How do you calculate tax slab? ›
...
Income Rates based on Tax* Slab.
| Income | Tax Rate(%) | Tax Payable |
|---|---|---|
| From ₹10 Lakhs to ₹12.5 Lakhs | 20 | ₹75,000 + 20% of Excess |
| From ₹12.5 Lakhs to ₹15 Lakhs | 25 | ₹1,25,000 + 25% of Excess |
| Above ₹15 Lakhs | 30 | ₹1,87,500 + 30% of Excess |
Your gross income minus all available deductions is your taxable income. Compare that amount to your tax bracket to estimate the amount you'll owe before applying any available tax credits.
Which deductions are allowed in new tax slab? ›For the FY 2021-2022, the employer's contributions towards superannuation, EPF, and NPS are available for tax exemption up to a maximum limit of Rs. 7.5 lakh. Employees are not taxed on the employer's contribution to their EPF account as long as it does not exceed 12% of their gross salary (basic plus DA).
Which deductions are not allowed in new tax regime? ›the new regime.
All deductions under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80G, 80GG, 80GGA, 80GGC etc) will not be claimable by those opting for the new tax regime.
You are required to file Form 10-IE to opt-out of the new tax regime. If I own one house property in my name and one more as a co-owner and my total income is less than Rs 50 lakh, which ITR form should be used to file returns in FY 2022-23.
At what age is Social Security no longer taxed? ›However once you are at full retirement age, which is between 65 and 67 years old depending on your year of birth, your Social Security payments can no longer be withheld if, when combined with your other forms of income, they exceed the maximum threshold.
What is the standard deduction for seniors over 65 in 2023? ›2023 Standard Deduction
Taxpayers who are at least 65 years old or blind can claim an additional standard deduction of $1,500 is allowed for 2023 ($1,850 if you're claiming the single or head of household filing status).
If you are age 65 or older, your standard deduction increases by $1,700 if you file as single or head of household. If you are legally blind, your standard deduction increases by $1,700 as well. If you are married filing jointly and you OR your spouse is 65 or older, your standard deduction increases by $1,350.
Do I have to pay estimated taxes for 2023? ›If you're a calendar year taxpayer and you file your 2022 Form 1040 by March 1, 2023, you don't need to make an estimated tax payment if you pay all the tax you owe at that time.
How much salary is Exempt from tax? ›80CCD(1), 80CCC, Section 80C
Tax savings options for salaried employees include investments computed under section 80C – where an individual or HUF can receive a deduction of income tax on salary up to Rs. 1.5 lakh. Income arising due to capital gains is not allowed for deductions under income tax for salaried people.
How do I opt for new tax regime for salaried employees? ›
The taxpayers should file Form 10IE electronically. Taxpayers can file the form through the income tax department portal to opt for the new tax regime for FY 2020-21 and onwards. The form will be filed using either the digital signature or through an Electronic Verification Code (EVC).
Should I choose the new tax regime? ›According to Dasari, if you have deductions up to Rs 3.5 lakh (Rs 1.5 lakh under Section 80C, Standard deduction of Rs. 50,000, and home loan interest of up to Rs 1.5 lakh), the new regime would be beneficial. “Having said that, if your investment is more than Rs 3.5 lakh, the old regime is beneficial.
What are the new tax brackets for 2022? ›For the 2022 tax year, there are seven federal income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your tax bracket is determined by your filing status and taxable income.
What are the advantages and disadvantages of progressive tax? ›These are:
Rich people are taxed at a higher rate than the poor because the ability to pay of the former increases as their incomes rise. Secondly, as progressive taxes are based on the ability to pay principle, it tends to reduce disparities in the distribution of income and wealth.
But all taxes adversely affect ability to save. Since rich people save more than the poor, progressive rate of taxation reduces savings potentiality. This means low level of investment. Lower rate of investment has a dampening effect on economic growth of a country.
What are negative impacts taxation? ›Imposition of taxes results in the reduction of disposable income of the taxpayers. This will reduce their expenditure on necessaries which are required to be consumed for the sake of improving efficiency. As efficiency suffers ability to work declines. This ultimately adversely affects savings and investment.
Is there any change in income tax slabs? ›In Budget 2022, Finance Minister Nirmala Sitharaman did not announce any change in the income tax slabs, which came as a disappointment for salaried individuals.
How much is $50,000 salary per month? ›If you make $50,000 per year, your Monthly salary would be $4,167. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week.
How much tax will I pay if my salary is 500000? ›If you make ₹ 500,000 a year living in India, you will be taxed ₹ 66,248. That means that your net pay will be ₹ 433,752 per year, or ₹ 36,146 per month. Your average tax rate is 13.3% and your marginal tax rate is 51.1%.
How much tax do I pay on 60000? ›| Annual salary | $60,000 |
|---|---|
| Marginal tax rate | 32.5% |
| Annual tax paid | $11,067 |
| Annual take home pay | $48,933 |
What is the tax for $900,000 salary? ›
If you make ₹ 900,000 a year living in India, you will be taxed ₹ 204,200. That means that your net pay will be ₹ 695,800 per year, or ₹ 57,983 per month. Your average tax rate is 22.7% and your marginal tax rate is 32.8%.
How do I calculate tax slab in Excel? ›Apply the formula =B6*5/100 in cell B7. Step 6: Then, you have to press the Enter key, and you will get the income tax value in column B7. Here, the tax value we have got is 10,950. So, this is the amount you have to pay as the tax on your income.
What is tax slab in simple words? ›Income Tax Slab is a document to define income tax rates based on different taxable income slab.
Is 401k taxable income? ›Traditional 401(k) plans are tax-deferred. You don't have to pay income taxes on your contributions, though you will have to pay other payroll taxes, like Social Security and Medicare taxes. You won't pay income tax on 401(k) money until you withdraw it.
Do 401k contributions reduce taxable income? ›Money pulled from your take-home pay and put into a 401(k) lowers your taxable income so you pay less income tax now. For example, let's assume your salary is $35,000 and your tax bracket is 25%. When you contribute 6% of your salary into a tax-deferred 401(k)— $2,100—your taxable income is reduced to $32,900.
Does taxable income include capital gains? ›Capital gains are generally included in taxable income, but in most cases, are taxed at a lower rate. A capital gain is realized when a capital asset is sold or exchanged at a price higher than its basis. Basis is an asset's purchase price, plus commissions and the cost of improvements less depreciation.
Which is best for tax exemption? ›You could choose from Unit Linked Insurance Plans (ULIPs), Equity Linked Savings Schemes (ELSS), Child Plans, among others. Tax exemption of up to Rs 1.5 lakh under Section 80C. Term insurance cover with a sum assured that is equal to 15 to 20 ties of your annual income. Public Provident Fund (PPF)
What are the most overlooked tax deductions? ›- State sales taxes. ...
- Reinvested dividends. ...
- Out-of-pocket charitable contributions. ...
- Student loan interest paid by you or someone else. ...
- Moving expenses. ...
- Child and Dependent Care Tax Credit.
Do note that if your income tax refund is above 50,000, that is Rs. 50,000/- and depending on your tax liability, you may be liable to pay interest on the refund amount.
What are the advantages of new tax regime? ›The new tax regime offers the flexibility to the taxpayer to invest their money as they prefer. With the new scheme, there is no obligatory requirement to invest in tax saving schemes and insurance plans which may not be in alignment with their financial goals.
Can you switch between old and new tax regime for salaried? ›
Is It Allowed To Swap Between The Old And New Income Tax Regimes Multiple Times? Salaried individual taxpayers can make this choice every year. Taxpayers with income under the head house property, salary, other sources, and capital gains can choose to switch between the old and the new regime every year.
When should I opt for new regime? ›If any taxpayer is unable to make any tax-saving investments then the new tax scheme would definitely be a better choice. If any taxpayer opts for New Tax Regime, then he would be eligible to take benefit of these tax rate slabs.
Is tax slab changed in 2022? ›When it comes to federal income tax rates and brackets, the tax rates themselves aren't changing from 2022 to 2023. The same seven tax rates in effect for the 2022 tax year – 10%, 12%, 22%, 24%, 32%, 35% and 37% – still apply for 2023.
What are the federal tax slabs for 2022? ›2022 Tax Brackets (Taxes due April 2023)
For the 2022 tax year, there are seven federal income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your tax bracket is determined by your filing status and taxable income.
Individual Top Marginal Income Tax Rate Increase
A proposed increase in the top ordinary income tax rate from 37% to 39.6% would be effective starting with the 2022 tax year. This change would accelerate the return to a top income tax bracket of 39.6% rather than waiting until tax years following 2025.
| Taxable income | New Tax Regime Rate |
|---|---|
| Rs. 12,50,001 – Rs. 15,00,000 | Rs. 1,25,000 + 25% of total income above Rs. 12.5 lakh + 4% cess |
| Above Rs. 15,00,000 | Rs. 1,87,500 + 30% of total income above Rs. 15 lakh + 4% cess |
If you make $120,000 a year living in the region of California, USA, you will be taxed $31,682. Your average tax rate is 16.51% and your marginal tax rate is 24%.
Does Social Security count as income? ›You must pay taxes on up to 85% of your Social Security benefits if you file a: Federal tax return as an “individual” and your “combined income” exceeds $25,000. Joint return, and you and your spouse have “combined income” of more than $32,000.
Are bonuses taxed differently? ›A bonus is always a welcome bump in pay, but it's taxed differently from regular income. Instead of adding it to your ordinary income and taxing it at your top marginal tax rate, the IRS considers bonuses to be “supplemental wages” and levies a flat 22 percent federal withholding rate.
Are bonuses taxed higher? ›Why are bonuses are taxed so high? Bonuses are taxed heavily because of what's called "supplemental income." Although all of your earned dollars are equal at tax time, when bonuses are issued, they're considered supplemental income by the IRS and held to a higher withholding rate.
Will capital gains tax increase in 2023? ›
Long-term capital gains tax rates for the 2023 tax year
Above that income level, the rate jumps to 20 percent. In 2023, individual filers won't pay any capital gains tax if their total taxable income is $44,625 or less. The rate jumps to 15 percent on capital gains, if their income is $44,626 to $492,300.
Long-term capital gains come from assets held for over a year. Short-term capital gains come from assets held for under a year. Based on filing status and taxable income, long-term capital gains for tax year 2023 (the same rate as in 2022) will be taxed at 0%, 15% and 20%. Short-term gains are taxed as ordinary income.
What is the maximum itemized deductions for 2022? ›For 2022, as in 2021, 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act.
How can I reduce my taxable income? ›An effective way to reduce taxable income is to contribute to a retirement account through an employer-sponsored plan or an individual retirement account (IRA). Both health spending accounts and flexible spending accounts help reduce taxable income during the years in which contributions are made.
How can I avoid paying taxes on my salary? ›- PPF (Public Provident Fund)
- Tax Saving FDs.
- ELSS (Equity Linked Savings Scheme)
- NSC (National Saving Certificate)
- Life Insurance Premium.
- NPS (National Pension Scheme)
- Home Loan Repayment.
- Payment of tuition fees.
Income Tax Slab Rates for New Vs Old Tax Regime
As per the budget announcement 2023, the income tax exemption limit is Rs 3 lakh and tax rebates increased from Rs 5 lakh to Rs 7 lakh. So individuals with income upto 7.5 lakhs (Rs 50,000 standard deduction) will not pay any tax as per the new tax regime.