New income tax regime: In the union budget 2023, finance minister Nirmala Sitharaman made some changes in the new income tax regime to make it more attractive for a taxpayer going to file income tax return (ITR) in the financial year 2023-24. From 1st April 2023, benefit of Section 87A has been extended to new tax regime and those taxpayers opting for new tax regime in FY24 will be able to claim tax rebate of up to ₹12,500 in one financial year or assessment year. However, those who opt new tax regime, they will have to leave various rebates like HRA, LTA, Section 80C, Section 80CCD etc. However, if the taxpayer is a salaried earning individual, then in that case, the taxpayer can claim standard deduction of up to ₹50,000. so, in that case, for a salaried earning individual, annual income up to ₹7.50 lakh is non-taxable and one needs to keep this in while during ITR filing.
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Speaking on the new income tax regime, Pankaj Mathpal, MD & CEO at Optima Money Managers said, “Section 87A benefit was earlier restricted to old tax regime only but now from next financial year, this benefit will become available to new tax regime as well. Therefore, up to ₹7 lakh annual income in single financial year will be non-taxable in new tax regime as well.”
However, in case of a salaries taxpayer, there is an additional standard deduction of up to ₹50,000 per annual available. So, if the taxpayer is salaried and its annual income is ₹7.5 lakh or below, he or she can claim standard deduction of up to ₹50,000 and avoid nay income tax outgo.
On how one’s ₹7.5 lakh annual income is non taxable under new tax regime, Archit Gupta, MD & CEO at Clear said, “Those who are salaried, can claim standard deduction of ₹50,000. Therefore salaried individuals with total income of up to ₹7,50,000 will pay zero tax by opting for the new regime. Such taxpayers then will not be able to claim usual tax benefits such as HRA, LTA etc.
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“Income tax assessees can claim exemptions as per Section 10(15) including an exemption up to ₹3,500 and ₹7,000 for interest received from Post Office Savings Account, in the case of individual and joint accounts. They can also avail other exemptions u/s 10(15) like interest received on deposit certificates issued under the Gold Monetisation Scheme, 2015,” said Vivek Jalan, Partner at Tax Connect Advisory.
