Under the brand new tax regime, taxpayers can avail decrease tax charges if they’re keen to forego exemptions
It is vital to notice that if a taxpayer chooses the brand new tax regime, they will be unable to say deductions equivalent to Section 80C, Section 80D, and others.
New Tax Regime: Finance Minister Nirmala Sitharaman proposed a big change to the brand new tax construction within the Union Budget 2023 to advertise extra adoption. These modifications will take impact from the monetary yr 2023–2024.
India launched a brand new tax regime within the Union Budget 2020 that gives decrease tax charges to people who’re keen to forego sure exemptions and deductions. This new regime is optionally available until FY 2022-23, later taxpayers can select to stick with the outdated regime as the brand new regime shall be default from April 01, 2023.
Under the new tax regime, taxpayers can avail decrease tax charges if they’re keen to forego exemptions and deductions equivalent to House Rent Allowance (HRA), Leave Travel Concession (LTC), and others.
The tax charges underneath the brand new regime are as follows:
For people with earnings up to-
- Rs. 3 lakhs: No tax
- Rs. 3 lakhs and Rs. 6 lakhs: 5% tax
- Rs. 6 lakhs and Rs. 9 lakhs: 10% tax
- Rs. 9 lakhs and Rs. 12 lakhs: 15% tax
- Rs. 12 lakhs and Rs. 15 lakhs: 20% tax
- Above Rs. 15 lakhs: 30% tax
It is vital to notice that if a taxpayer chooses the brand new tax regime, they will be unable to say deductions equivalent to Section 80C, Section 80D, and others.
Exemptions In New Tax Regime 2023-24
The tax slabs have undergone restructuring, and the brand new tax regime shall be made the default system for everybody from subsequent fiscal. The new tax system featured a diminished tax fee, there have been no exemptions accessible.
In follow, the brand new tax regime would be the default alternative for all taxpayers starting in FY24, and taxpayers who go for the outdated tax regime have to say their desire.
The tax-free restrict has now been raised to Rs 7 lakh.
Standard Deduction
A salaried taxpayer can declare as much as Rs 50,000 for the customary deduction. If you’re a household pensioner, then underneath the brand new tax regime you’ll be able to declare a regular deduction of Rs 15,000.
Income for a household pensioner is taxed underneath the top ‘Income from other sources.’
NPS Contribution by Employer
If your employer is contributing to your NPS account, then as a salaried worker you’re eligible to say a deduction for the contribution created from gross earnings. This deduction is claimed underneath Section 80CCD (2) of the Income-tax Act, 1961.
Section 80CCD(2) permits for a most deduction of 10% of the pay (Basic + DA).
Agniveer Corpus Fund
In the Budget Speech, the finance minister introduced that any quantity paid or deposited to the Agniveer Corpus Fund underneath the newly proposed part 80CCH of the Income-tax Act could be claimed as a deduction from earnings by the Agniveer.
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