The Indian government has announced new income tax rules for FY24 that will come into effect from April 1, 2023. The new tax regime announced in Budget 2023 will offer a new income tax slab with updated tax rates. The introduction of the new tax rules will have a significant impact on taxpayers, and it's essential to understand the changes to avoid any confusion. In this blog post, we will discuss everything you need to know about the new income tax rules for FY24.
New Income Tax Slab:
The updated income tax slab for the new tax regime will have six tax rates, as follows:
- No taxes levied on income up to ₹3 lakh.
- A 5% tax rate for income between ₹3 lakh to ₹6 lakh.
- A 10% tax rate for income between ₹6 lakh to ₹9 lakh.
- A 15% tax rate for income between ₹9 lakh to ₹12 lakh.
- A 20% tax rate for income between ₹12 lakh to ₹15 lakh.
- A 30% tax rate for income above ₹15 lakh.
The basic exemption limit has been increased to ₹3 lakh from ₹2.5 lakh to make the new tax regime more attractive. The highest tax rate of 30% will be levied on income above ₹15 lakh.
Surcharge Rates:
The surcharge rates have been reduced to 25% from 37% under the new tax regime for individuals earning more than 5 crores. The surcharge rate is reduced to 25% for any income over ₹2 crores for individuals who opt for this new tax regime. The revised surcharge rates under the new tax regime are as follows:
- Taxable income above 50 lakhs but up to ₹1 crore: 10%
- Taxable income above 1 crore but up to ₹2 crore: 15%
- Taxable income above 2 crores: 25%.
Taxpayer Options:
The new tax regime will be the default tax regime for salaried individuals who have not declared their choice. However, individuals and HUFs will have the option to choose between the old and new tax regimes every financial year, provided they do not have any business income. Individuals and HUFs with business income will have the option to choose once-in-a-lifetime. They cannot choose the new income tax regime again in future years once they have chosen the old one.
Section 87A Rebate:
The section 87A rebate is available under both income tax regimes. Under the old tax regime, a rebate of ₹12,500 is available for incomes up to ₹5 lakh. For the new tax regime, the rebate has been increased to ₹25,000 if the taxable limit does not exceed ₹7 lakh.
Standard Deduction:
The proposal to introduce a standard deduction in the new tax regime has been made in Budget 2023. Under this, salaried individuals, pensioners, and family pensioners will benefit from a standard deduction of ₹50,000/-. There is no change in the standard deduction provided under the old tax regime.
Turnover Limits:
The finance minister has revised the turnover limits under section 44AD from ₹2 crore to ₹3 crore for specified businesses, including Micro, Small, and Medium Enterprises (MSMEs). The Budget 2023 has also amended section 44ADA and revised the presumptive taxation limits of gross receipts from previous limits of ₹50 Lakhs to ₹75 Lakhs for specified professions.
Conclusion:
The new income tax rules for FY24 will have a significant impact on taxpayers. The revised income tax slabs, reduced surcharge rates, and the
