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BUDGET PROPOSALS FOR FY 2023-24
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UNION BUDGET 2023-24 AND PERSONAL FINANCE
PARTS OF FINANCE MINISTER'S BUDGET SPEECH DATED 01.02.2023 AFFECTING PERSONAL FINANCE
Finance Minister Ms Nirmala Sitharaman presented fresh budget proposals to the parliament on 01.02.2023 . Under the new tax regime , there are changes in personal income tax slabs , rates and rebates . This article enlists such measures through the extracts of FM's budget speech .
PARTS OF FM'S SPEECH AFFECTING PERSONAL FINANCE
DIRECT TAXES : These proposals ( on Income Tax ) aim to maintain continuity and stability of taxation, further simplify and rationalise various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens
COMMON IT RETURN : We intend to roll out a next-generation Common IT Return Form for tax payer convenience, and also plan to strengthen the grievance redressal mechanism.
NEW TAX REGIME TO BE DEFAULT REGIME : We are also making the new income tax regime as the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.
1. PERSONAL INCOME TAX : Currently, those with income up to Rs 5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to Rs 7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs 7 lakh will not have to pay any tax.
2. INCOME TAX SLABS FOR FY 2023 -24 UNDER NEW REGIME
The second proposal relates to middle-class individuals. I had introduced, in the year 2020, the new personal income tax regime with six income slabs starting from Rs 2.5 lakh. I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs 3 lakh. The new tax rates are:
1. Upto Rs.3,00,000 Nil
2. From Rs.3,00,001 to Rs.6,00,000 5 per cent.
3. From Rs.6,00,001 to Rs.9,00,000 10 per cent.
4. From Rs.9,00,001 to Rs.12,00,000 15 per cent.
5. From Rs.12,00,001 to Rs.15,00,000 20 per cent.
6. Above Rs.15,00,000 30 per cent.”;
a Tax rebate under Section 87 A is allowed up to an income of Rs 7. lakhs under the new tax regime
b . Standard Deduction of Rs 50,000 allowed on salaries / pension
3. STANDARD DEDUCTION : My third proposal is for the salaried class and the pensioners including family pensioners, for whom I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500.
4. SURCHARGE : My fourth announcement in personal income tax is regarding the highest tax rate which in our country is 42.74 per cent. This is among the highest in the world. I propose to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. This would result in reduction of the maximum tax rate to 39 per cent.
5. LEAVE ENCASHMENT : Lastly, the limit of Rs 3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was Rs 30,000/- pm. In line with the increase in government salaries, I am proposing to increase this limit to Rs 25 lakh.
DIRECT TAXES : These proposals ( on Income Tax ) aim to maintain continuity and stability of taxation, further simplify and rationalise various provisions to reduce the compliance burden, promote the entrepreneurial spirit and provide tax relief to citizens
COMMON IT RETURN : We intend to roll out a next-generation Common IT Return Form for tax payer convenience, and also plan to strengthen the grievance redressal mechanism.
NEW TAX REGIME TO BE DEFAULT REGIME : We are also making the new income tax regime as the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.
1. PERSONAL INCOME TAX : Currently, those with income up to Rs 5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to Rs 7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs 7 lakh will not have to pay any tax.
2. INCOME TAX SLABS FOR FY 2023 -24 UNDER NEW REGIME
The second proposal relates to middle-class individuals. I had introduced, in the year 2020, the new personal income tax regime with six income slabs starting from Rs 2.5 lakh. I propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs 3 lakh. The new tax rates are:
1. Upto Rs.3,00,000 Nil
2. From Rs.3,00,001 to Rs.6,00,000 5 per cent.
3. From Rs.6,00,001 to Rs.9,00,000 10 per cent.
4. From Rs.9,00,001 to Rs.12,00,000 15 per cent.
5. From Rs.12,00,001 to Rs.15,00,000 20 per cent.
6. Above Rs.15,00,000 30 per cent.”;
a Tax rebate under Section 87 A is allowed up to an income of Rs 7. lakhs under the new tax regime
b . Standard Deduction of Rs 50,000 allowed on salaries / pension
3. STANDARD DEDUCTION : My third proposal is for the salaried class and the pensioners including family pensioners, for whom I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500.
4. SURCHARGE : My fourth announcement in personal income tax is regarding the highest tax rate which in our country is 42.74 per cent. This is among the highest in the world. I propose to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. This would result in reduction of the maximum tax rate to 39 per cent.
5. LEAVE ENCASHMENT : Lastly, the limit of Rs 3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was Rs 30,000/- pm. In line with the increase in government salaries, I am proposing to increase this limit to Rs 25 lakh.
OTHER NOTABLE ANNOUNCEMENTS :
OTHER TAX MEASURES
1. CAP ON CAPITAL GAINS ON INVESTMENT IN RESIDENTIAL BUILDINGS :
" I propose to cap deduction from capital gains on investment in residential house under sections 54 and 54F to ` 10 crore. Another proposal with similar intent is to limit income tax exemption from proceeds of insurance policies with very high value. "
Other major measures :
a. Removing the minimum threshold of Rs 10,000/- for TDS and clarifying taxability relating to online gaming;
b. Not treating conversion of gold into electronic gold receipt and vice versa as capital gain;
c. Reducing the TDS rate from 30 per cent to 20 per cent on taxable portion of EPF withdrawal in non-PAN cases.
d. Taxation on income from Market Linked Debentures.
OTHER PROPOSALS :
KYC : The KYC process will be simplified adopting a ‘risk-based’ instead of ‘one size fits all’ approach. The financial sector regulators will also be 15 encouraged to have a KYC system fully amenable to meet the needs of Digital India.
DIGILOCKER : 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.
PAN : 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.
UNIFIED FILING PROCESS : For obviating the need for separate submission of 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 filer’s choice
SPECIAL DEPOSIT SCHEME FOR WOMEN : For commemorating Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate, will be made available for a two-year period up to March 2025. This will offer deposit facility up to Rs 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option.
SENIOR CITIZEN SAVING SCHEMES : The maximum deposit limit for Senior Citizen Savings Scheme will be enhanced from Rs 15 lakh to Rs 30 lakh.
MONTHLY INCOME SCHEME : 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.
TO READ COMPLETE SPEECH , CLICK HERE
TAX PLANNING FOR FY 2022-23 ( AY 2023-24 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation
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Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation
CLICK HERE TO READ
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AADHAR PAN CARD UMANG APP
SMALL FINANCE BANKS PAYMENT BANKS
UNIFIED PAYMENT INTERFACE BHARAT BILL PAYMENT SYSTEM
BHIM APP
e-INSURANCE Account ( eIA ) SWIFT
