Finance Minister Nirmala Sitharaman presented the Union Budget 2023 on 1st Feb.
In terms of Direct taxes, the keytakeovers in the budget are summarised as under :
1. Changes in New Tax Regime
There has been significant changes made in new tax regime and it seems that we are heading towards simple tax regime with no deductions/exemptions in coming years.
The most important part is that now the new tax regime will be the default scheme. i.e. you will have to switchover to old scheme (if it is beneficial)
The Changes in tax slab under new tax regime is as under :
Income Slab | Tax Rate |
0-300000 | Nil |
300000-600000 | 5% |
600000-900000 | 10% |
900000-1200000 | 15% |
1200000-1500000 | 20% |
Above 1500000 | 30% |
There is total tax rebate if your income is upto Rs.7 lakhs in a year. i.e. no tax will have to be paid for income below 7 lakhs. However, if income is above 7 lakhs, the tax will be calculated from 300000 onwards as per above slab rate.
2. No deductions under new tax regime but standard deduction & family pension deduction will be allowed
Again a welcome change has been made and standard deduction from salary of Rs.50000 will be allowed under new tax regime also which is there in old tax regime. Also deduction of Rs.15000 or 1/3rd of family pension will also be allowed. All other deductions will not be allowed as earlier.
Thus in case of salaried persons, now income upto 7.5 lakh per annum will be tax free.
3. Some relief for high income earners
The surcharge for persons earning above 5 crores has been reduced from 37% to 25%. Thus the maximum tax rate will now be 39% instead of 42.74% earlier.
4. Exemption limit u/s 54 & 54F under Capital Gains
Earlier, there was no limit for claiming exemption u/s 54 & 54F i.e. deduction for purchase or construction of new house from long term capital gains.
Now a limit has been fixed which is 10 crores under 54 & 54F so that the provision is not misused by purchasing/constructing luxurious and expensive house.
5. Increase in Presumptive taxation limit
The earlier presumptive taxation limit u/s 44AD [for business] has been increased from 2 Crores to 3 Crores.
Also the presumptive taxation limit u/s 44ADA [for professions] has been increased from 50 lakhs to 75 lakhs.
The above increased limit can only be availed if the gross receipts in cash is not more than 5% of total receipts.
Are you happy with these changes?
Yes
No
Comments