Feb 1, 2023
BY: Sneha Kulkarni, ET OnlineUnion Finance Minister Nirmala Sitharaman delivered her sixth consecutive budget speech on February 1, 2023. She had a few big bang personal income tax related announcements for the common man. Here is a look at 10 key income tax related announcements from Budget 2023.
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The basic exemption amount has increased under the new income tax system in Budget 2023 from Rs 2.5 lakh to Rs 3 lakh. The new tax system has modified the income tax slabs. The declaration states that there will be 5 income tax slabs instead of the current 6 in FY 2023–24.
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The income threshold for receiving a rebate under Section 87A has increased from Rs 5 lakh to Rs 7 lakh.
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The tax deduction for capital gains from reinvesting in residential real estate has been significantly limited by budget 2023. It is proposed to cap deduction from capital gains on investment in residential house under sections 54 and 54F to Rs 10 crore.
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TDS threshold for online gaming has been removed from Rs 10,000 to nil in Budget 2023. As per the announcement, "Removing the minimum threshold of Rs 10,000/- for TDS and clarifying taxability relating to online gaming."
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Tax deducted on EPF withdrawals has been reduced to 20% from 30% in non-PAN cases in Budget 2023. According to the announcement made by Finance Minister Nirmala Sitharaman, “Reducing the TDS rate from 30% to 20% on the taxable portion of EPF withdrawal in non-PAN cases.”
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“The limit of Rs3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the year 2002. In line with the increase in government salaries, I am proposing to increase this limit to Rs25 lakh.”
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If the total annual premium paid on life insurance policies other than ULIP goes beyond Rs 5 lakh proceeds will no longer be exempted from tax. Only exception when the entire income will still be tax exempted is sum insured received in case of the death of the policyholder.
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Highest surcharge levied under personal income tax has been reduced significantly from 37% to 25% in the new tax regime. Maximum tax rate on highest income slab with income above Rs 2 crore, which is currently is 42.74% that includes all surcharges, will come down to 39%.
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Standard deduction of Rs 50000 which was so far available only under old tax regime has now been extended to new tax regime for salaried and pensioners including family pensioners.
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The presumptive taxation limits for MSME and Professionals have raised to Rs.3 crore and Rs.75 lakh respectively under the new tax regime.
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