April 1 marks the beginning of a new financial year after which Union Budget proposals on income tax take into effect from this day. These changes were announced by Finance minister Nirmala Sitharaman in her Budget speech this year in February. Here’s a look at some of the changes in tax rules that will be effective from April 1:
- There will be a default adoption of the new tax regime which aims to streamline tax filing procedure and promote greater participation in the new regime. Although, taxpayers will still have liberty to stick to the old tax regime if it is more beneficial to them.
- The tax slabs will be as follows: Income from 3 lakh and 6 lakh will be taxed at 5%, 6 lakh to 9 lakh will be taxed at 10%, 9 lakh to 12 lakh will be taxed at 15%,12 lakh to 15 lakh will taxed 20% and ₹15 lakh and above will be taxed at 30%.
- Standard deduction of ₹50,000, which was previously applicable to the old tax regime, has now been incorporated into the new tax regime. This will further decrease taxable income under the new regime.
- The highest rate of surcharge of 37% on income above 5 crore has been reduced to 25%.
- Maturity proceeds from life insurance policies, which are issued on or after April 1, 2023 where the total premium exceeds ₹5 lakh, will be subject to taxation.
- The leave encashment tax exemption limit for non-government employees was ₹3 lakh but it has now been increased to ₹25 lakh.
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