Although the new fiscal year 2023-24 has started today, the income tax changes announced by Finance Minister Nirmala Sitharaman in the 2023 budget are also effective from today. Here are the changed rules:
1) The new income tax regime has become the default mode
The new income tax regime becomes the default tax regime as of April 1, 2023. Assessors will still have the option to use the old regime. The standard deduction under the new taxable income scheme is more than Rs 15.5 lakh or Rs 52,500 for employees and retirees.
2) Standard deduction
The standard deduction of Rs 50,000, offered to employees under the old tax regime, remains unchanged. The Minister of Finance has announced that the standard deduction will be extended to the new tax regime for pensioners.
3) Raise tax refund limit to Rs 7 lakh
The increase of the tax refund limit from Rs 5 lakh to Rs 7 lakh means that those earning less than Rs 7 lakh do not need to make any investments to qualify for the exemption. The income of these individuals is completely tax-free, no matter how much they invest.
4) ALT
Non-governmental employees are exempt from the obligation to pay to leave up to a certain amount. The limit is now Rs 25 lakh.
5) There is no LTCG tax benefit for these mutual funds
Investments in debt mutual funds will be subject to short-term capital gains tax effective immediately. Investors will lose out on the long-term financial benefits that made those investments so attractive.
6) Market-linked bonds
Effective immediately, investments in market-linked bonds (MLDs) will be treated as short-term financial assets. With this, the past major investment process has come to an end, with mild negative effects on the mutual fund industry.
7) Life insurance policy
At the start of the new financial year, i.e. April 1, 2023, income from life insurance premiums above the annual premium of Rs 50,000 will be taxable. During the presentation of the 2023 budget, Finance Minister Nirmala Sitharaman also said that ULIP will not be subject to new income tax regulations.