Changes That Will Affect You As An Indian Taxpayer In 2023-24
April 1, 2023, marks the beginning of the new fiscal year in India and with it there are several changes in income tax rules and other developments like new tax slabs coming in place. These changes, as announced by Finance Minister Nirmala Sitharaman during her speech on the Union Budget, are going to affect taxpayers all across the country.
Analyzing The New And Old Tax Regime
Default New Tax Regime
Let us start with the change that perhaps most taxpayers will be interested in. The old tax regime has now been replaced, allowing taxpayers who want to to still retain most of the old tax regime features to opt for the new income tax regime whenever they are ready to pay their taxes.
Old Tax Regime Benefits
Some of the benefits that taxpayers were able to enjoy under the old tax regime were:
- HRA(House Rent Allowance)
- Interest paid on a home loan.
- Education allowance for children.
- Tax on such professionals.
Benefits of the New Tax Regime
One dreads tax tendering as it is a total hassle, but the new tax regime puts an end to tax rebates and warrants splitting up payment into slabs.
- The new tax regime has a higher threshold of ₹7 lakh instead of ₹5 lakh.
- For this reason, the new tax regime will be more beneficial to employees as those who earn up to ₹7 lakh are not liable to tax.
New Tax Slabs for 2023-24
Every taxpayer must pay their annual income tax based on the income earned during the previous year. As per new income slabs effective from April 2020, there is a tax rebate of 6.9 percent to the residents which is aimed at boosting their chances of savings. In this regard, the new exemption slabs effective from April are as follows.
- 5% tax income on those earning between ₹ 3 lakh and ₹ 6 lakh
- 10% tax income on those earning between ₹ 6 lakh and ₹ 9 lakh
- 15% tax income on those earning between ₹ 9 lakh and ₹ 12 lakh
- 20% tax income on those earning between ₹ 12 lakh and ₹ 15 lakh
- 30% tax income on those earning more than ₹ 15 lakh
How Are Taxes Calculated?
For someone who earns around ₹ 10 lakh, they will need to pay tax for the amount over ₹ 3 lakh as the first taxpayer has an exemption of 3 lakh. The tax rate then changes to 5% between 3 and 6 lakhs, then it remains at 10% for those in the 6 while a rate of 15% is applied to pays earning between 9-10 lakhs. So to sum it up, this will result in a total tax of ₹ 60,000. In more detail, their paysduring the period pay taxes as follows:
- It would not levy a tax on the first 3 lakh
- All pays falling between 3 lakhs to 6 lakhs will pay 50000 at a tax rate of 5%
- Where pays fall between 6 lakhs and 9 lakhs, they will need to pay 10000
- The remaining amount of one lakh, which rests between 9 and 10 lakh, incurs a taxable amount of 15% which is 15000
Other Important Updates
How are Just Jitters changing the world for taxpayers is one of the reasons for updated tax policies. When a huge amount of change is needed to take place, all policies and regulations should be updated to make them benefit more people than before.
Leave Travel Allowance (LTA)
It has been rising steadily since 2001 and now stands at 25 lakhs. Leave encashments are now earning exemptions of around 5 crore in total. Furthermore this should warrant well for each resident as it further excalate the benefits they can earn. In ceasars if this is earned in case anyone is looking to avail leave and earning an exemption On what a expenses can be on encashment, regardless it never in the past went above 9 lakhs.
Impact on Taxpayers
Nonetheless these changes should be highly beneficial towards mid-cyclic economists for these changes straight up aimed towards simplifying taxation.
Switching to the new tax system without prior knowledge of its many subtleties is really dangerous.
Conclusion: Making Wise Decisions
One of the greatest appeals of the new tax regime is that it is simple and it is expected that a larger number of taxpayers will select it. However, whether to take the new or the old tax regimes should be based on the financial position of the taxpayer and the deductions available to him.
Looking for professional advice is definitely one way out for solving this dilemma, and such experts as Dream Location are known for their sound pieces of advice in these kinds of situations, and means to save tax and achieve a better end.
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