Budget 2023 on 1st February 2023 is unveiled by the Finance Minister, Nirmala Sitharaman. everyone is now wondering the changes in Income Tax slab 2023-24. The Budget aimed to address the ongoing challenges and fortify the nation for the next few decades. The government has taken 5 key measures to make the new tax regime more attractive and Government made the new tax regime as the default tax regime. However, taxpayers have an option to choose the old tax regime.
Changes in the New Tax Regime
“Currently, those with income up to ₹5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to ₹7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to ` 7 lakh will not have to pay any tax,” said Finance Minister while presenting Budget 2023.
The new tax regime is now the default tax regime, and the government has taken 5 measures to make it more attractive. Taxpayers have an option to choose the old tax regime. The new tax regime slabs for FY 2023-24 (AY 2024-25) are as follows:
| Income Slabs | Income Tax Rate |
|---|---|
| Up to ₹ 3,00,000 | Nil |
| ₹3,00,000 – ₹6,00,000 | 5% on income which exceeds ₹3,00,000 |
| ₹6,00,000 to ₹900,000 | ₹15,000 + 10% on income more than ₹6,00,000 |
| ₹9,00,000 to ₹12,00,000 | ₹45,000 + 15% on income more than ₹9,00,000 |
| ₹12,00,000 to ₹1500,000 | ₹90,000 + 20% on income more than ₹12,00,000 |
| Above ₹15,00,000 | ₹150,000 + 30% on income more than ₹15,00,000 |
Income Tax rebate on an income of up to ₹7 lakhs has been introduced under the new tax regime. This means that taxpayers with an income of up to ₹7 lakhs will not have to pay any tax at all!
Highest surcharge under the new tax regime has been reduced to 25% from 37% for people earning more than ₹5 crore. This move brings down their tax rate from 42.74% to 39%.
Standard deduction:
Salary income: ₹50,000 standard deduction under the new tax regime as well. Effectively, ₹7.5 lakhs is your tax-free income under the new regime.
Family pension: Standard deduction on such pension: ₹15,000 or 1/3rd of pension, whichever is lower.
Presumptive Taxation Limits Revised for FY 2023-24
| Category | Previous Limits | Revised Limits |
| Sec 44AD: For small businesses | ₹2 crores | ₹3 crores* |
| Sec 44ADA: For professionals like doctors, lawyers, engineers, etc. | ₹50 lakhs | ₹75 lakhs* |
income tax Start-ups
| Start-ups | Previous limit | Revised limit |
| Date of incorporation for income tax benefits | 31.03.2023 | 31.03.2024 |
| Time limit for set-off and carry forward of losses | 7 years from incorporation | 10 years from incorporation |
income tax Co-operative Societies
Some of the proposals announced for co-operative Societies are:
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New manufacturing initiatives: The government has extended the benefit of concessional tax rate of 15% to new co-operatives that commence manufacturing by 31st March, 2024.
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Sugar co-operatives: Any expenditure that was disallowed to sugar co-operatives prior to 2016-17, can be claimed now by making an application to the Assessing Officer.
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Section 194N: TDS limit on cash withdrawals is increased to ₹3 crores for co-operatives societies.
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Cash deposit limit: Limit for cash deposits and loans by Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs) is being increased to a maximum of ₹2,00,000 per member.
Other Direct Tax Updates
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Leave Encashment: The exemption threshold for Leave encashment has been increased to ₹25 lakh from ₹3 lakh for non-government employees. Thus, at the time of retirement, leave encashment of up to ₹25 lakhs for a maximum period of 10 months is tax-free under Section 10(10AA).
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TDS on EPF Withdrawal: TDS rate has been reduced to 20% from 30% on taxable withdrawal of EPF.
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Payment Based Deduction: Payments to MSMEs must be made within the time frame agreed upon in writing, with a maximum limit of 45 days. If there is no written agreement, the time frame is 15 days. Any payment made outside this time frame can only be deducted (as expenditure) in the year it is actually paid.
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No Penalty: Where a loan is accepted or repaid by a primary agricultural credit society or a primary co-operative agricultural and rural development bank to its members or vice versa, no penalty would arise under Section 269SS or 269ST.
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Capital Gains Exemption limit: The capital gains tax exemption under Section 54 to 54F is restricted to Rs. 10 crores. Earlier, there was no threshold.
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Online Gaming: Net winnings from online gaming will be taxed at 30%. From 1 July 2023, TDS will be withheld on such net winnings (currently the rate is 30%).
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Section 80G donations: Donations made to the following funds will not be eligible for 80G deductions:
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Jawaharlal Nehru Memorial Fund
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Indira Gandhi Memorial Trust and
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Rajiv Gandhi Foundation
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read more about Union Budget 2023 , download highlights of Union budget 2023 Click here
Conclusion
The Union Budget for FY 2023-24 this year aims to further strengthen India’s economic status. In the 75th Year of India’s Independence, the World has recognized the Indian Economy as a ‘bright star‘ with its Economic Growth estimated at 7 per cent, which is the highest among all major economies. and to make the new tax system more appealing, several tax relief measures were implemented in the 2023 Budget. Which tax system is preferable between the old and new ones will depend on a person’s specific situation.