Key money moves in Union Budget 2023-24
Finance Minister, Nirmala Sitharaman presented the last full-year budget under the Modi Government 2.0 today which has brought a smile to citizensâ€™ faces. After two disappointing budgets for the common men of the country, this budget has finally something to offer them. Here are the key provisions of the budget â€“
- From April 2023 people earning up to Rs. 7 lakhs, do not have to pay any income tax. The income tax slabs have been altered and now, if your income is less than equal to Rs. 7 lakhs, then it will be entirely exempted from income tax as per Section 87A. The updated tax slabs are as follows â€“
|Income Range (Rs.)||Updated New Tax Regime||Income Range(Rs.)||Existing New Tax Regime|
|0 -3lakhs||Nil||0-2.5 lakhs||Nil|
|3 lakhs â€“ 6 lakhs||5%||2.5 lakhs â€“ 5 lakhs||5%|
|6 lakhs â€“ 9 lakhs||10%||5 lakhs -7.5 lakhs||10%|
|9 â€“ lakhs â€“ 12 lakhs||15%||7.5 lakhs â€“ 10 lakhs||15%|
|12 lakhs â€“ 15 lakhs||20%||10 lakhs â€“ 12.5 lakhs||20%|
|Above 15 lakhs||30%||12.5 lakhs â€“ 15 lakhs||25%|
|Â||Â||Above 15 lakhs||30%|
So, this updated tax regime will not only decrease the tax burden of the taxpayers but also help simplify tax assessment and income tax return filing process as suggested by the finance minister during her budget speech.
This updated new tax regime can help a person with an income of Rs. 10 lakhs save Rs. 15000 compared to the existing tax regime.
- Salaried people having income over Rs. 15.5 lakhs will be eligible for a higher standard decoction which is Rs. 52500 while for those who have a salary income below Rs. 15.5 lakhs, they will be entitled to Rs. 50000 of standard deduction which is already there.
- Individuals having a higher income that is more than Rs. 2 crores will be now paying a 25% surcharge against the existing 37%.
- The budget has imposed a limit ofÂ Rs 10 crore for deduction on long-term capital gain tax for reinvestment in residential properties under Section 54 and 54F of the Income Tax Act. These two sections deal with reinvestment of proceeds from sale of long-term assets (housing or other capital assets like shares) to buy residential properties.
While these new provisions of the budget will help people save more taxes but they also need to keep in mind, that the updated new tax regime does not have any scope for the deductions and exemptions that the old tax regime has.
So, if you are investing in LIC, PPF, NPS, or any such schemes or mutual funds like ELSS which provide deductions under section 80 C of the Income Tax Act, you need to keep in mind, if you choose the new tax regime, then you will not be able to avail these deductions. It is not only about 80 C deductions but for all 70 deductions available under the Income Tax Act.
Thus even after making the updated new tax regime the default tax regime today in the budget session, our finance minister said that the old tax regime will be available too and people can opt for that if they want to avail of deductions.
Another important aspect of this budget which can adversely affect the HNIs is the tax on insurance policies having annual premiums over Rs. 5 lakhs. Earlier, insurance policy premiums were eligible for deductions, however, from the 1St of April, 2023, insurance holders having high-premium (above Rs. 5 lakhs per annum) insurance policies will not be eligible for any deductions under section 80C.
The budget has no major negatives for larger middle class barring a couple of provisions like upper cap in Section 54 and 54F, and the removal of tax exemption on returns from insurance policies of Rs 5 lakh plus premium, which would primarily affect high networth individuals.