In the Union Budget 2023, Finance Minister Nirmala Sitharaman announced significant adjustments to the new income tax regime, including a reduction in tax rates and a reduction in taxes on annual income up to $7 thousand. Increased discounts for individuals subject to the new income tax regime from $5 thousand to $7 lakh is the most important of the major announcements made by the finance minister. In addition, FM announced to amend the tax structure under the new tax regime by reducing the number of tax tables to five and raising the tax exemption threshold to $3 thousand. In contrast to the new income tax regime, the tax tables of the old tax structure are not changed by the 2023 budget. “We are also making the new income tax regime the default tax regime. However, citizens will continue to have the option to take advantage of the benefits of the old tax regime,” FM Nirmala Sitharaman said in her budget speech.
In addition, the new income tax bracket added a standard deduction of $50,000 and family pension deduction up to $15,000 annually. This suggests that under the new income tax regime, a salaried individual will also be eligible for a one-time deduction of $50,000 from his or her gross taxable income, which was previously only possible under the old tax regime.
Learn how individual taxpayers can make the most of the old tax regime of tax deductions for Assessment Year (AY) 2024-25 or for earnings earned in fiscal year 2023-24. , even as the government has made some changes under the new tax regime.
Investment in tax savings for individuals under the old tax regime
Based on an exclusive interview with Dr Suresh Surana, Founder of RSM India, the spokesperson said that under the provisions of Income Tax Act 1961 (‘IT Act’), taxpayers Individuals are offered certain deductions under chapter VI-A on performance of certain conditions. Under current laws, most of these benefits are limited to individuals continuing with the old Tax Scheme. We’ve provided an overview of some of the best and most widely used tax-saving tools for individuals.
1. Section 80C – Deductions for Certain Investments and Expenditures:
Section 80C of the IT Act is one of the most common deductions among individuals because it provides expenditure-related and investment-related deductions. Some of the investment affiliate options in this section include Life Premium, Contribution to PPF, investment in Sukanya Samriddhi Yojana, Equity Linked Savings Scheme (‘ELSS’), investment in 5 year fixed deposit, etc.
Furthermore, this section allows deduction of expenses incurred for Tuition paid for children’s education in India, stamp duty/registration fee, principal repayment on home loans etc. Total amount of deduction in this part is capped at Rs. 1,50,000 per Fiscal Year (FY) pursuant to this section. The majority of taxpayers aim to make the most of the benefits under this section, which can ultimately reduce their basic tax liability by up to Rs. 45,000 (ie Rs 1,50,000 x 30% – assuming they’re in the 30% tax bracket)
2. Section 80CCD(1b) – National Retirement Program Deduction
Individuals, National Retirement Program contributors are notified, are granted an additional relief of up to Rs. 50,000 in this section. Thus, an individual can effectively save tax on taxable income up to Rs. 2,00,000 per fiscal year ie $1,50,000 u/s 80C and $50,000 in this section.
3. Section 80TTA/80TTB – Deduction of Bank Account Interest:
Almost every individual has a Savings Account in some other bank or bank and earns the same interest. Furthermore, as India is moving towards a cashless economy, the lower and weaker sections of society are also encouraged to open and maintain bank accounts.
Under section 80TTA, individuals who earn interest from a savings account maintained at a bank or post office, can claim a deduction of up to Rs. 10,000 per fiscal year. Furthermore, Section 80TTB of the IT Act provides additional benefits for resident seniors, which raise the maximum deduction limit to Rs. 50,000 per year and also extends the benefit of interest received on fixed/term deposits.
Commenting on the perspective of the 2023 Master Budget in terms of taxes, Dr Suresh Surana said “The Union Budget 2023 is a dream budget, focusing on investment and infrastructure, initiatives digitalisation, fiscal consolidation, stabilization of the corporate tax regime and major simplification of individual procedures. tax regime. There was a massive increase in investment spending, spurring activities based on agriculture, tourism, fintech and education. Measures to improve business facilitation, expedite tax return processing and appellate procedures, and increase the flat tax limit for small businesses and professionals will significantly improve management tax. The individual tax regime has been revised and the new regime provides a higher base tax exemption, reduces the number of tax tables from 7 to 6 in a symmetrical manner, offers higher discounts and reduces the top tax rate from 42.74% down to 39%. Widespread understanding of capital gains tax increases or new taxes to meet additional funding has also been resolved without change in this respect. The corporate tax regime has been very attractive with an effective tax rate of 25.17% and even a lower tax rate of 17.16% for new manufacturing companies. Areas for further improvement are extending production start times to lower tax rates and reducing taxes on dividends to a maximum of 20%.
catch them all Business newsletter, Market News, Hot news Events and Latest news Update on Live Mint. Download Mint News Application to get Daily Market Updates.
