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Finance News

Major Income Tax Rule Changes starting from April 1, 2023

Income Tax Rule 2023-2024
Major Income Tax Rule Changes that came into effect from April 1, 2023.

Various changes to the income tax laws came into effect that will impact Indian taxpayers from April 1, 2023, which marks the start of the new fiscal year 2023-24.

The Indian economy has seen a boom, especially in the tax collections from the past few years. For the Financial Year 2022–2023, direct tax revenue increased by more than 20%. This number is expected to rise with time as the economy is on upside tack.

Nirmala Sitharaman, the Union Finance Minister, made the revisions public at the presentation of the Union Budget on February 1, 2023. A few modifications that were recently made in the Finance Bill 2023 are also expected to have an impact on some payers and entrepreneurs.

Some of the major changes that should affect everyone are as follows:

  1. The new income tax regime will be the default tax regime as of April 1, 2023. Tax assessors will still have the option to choose from the prior regime. For salaried individuals and pensioners, the standard deduction for taxable income exceeding Rs.15.5 lakhs is now set at ₹52,500.
  2. The standard deduction for employees under the old tax regime remains at ₹50,000. However, the finance minister has extended this benefit to pensioners under the new tax regime. Every salaried individual earning ₹15.5 lakhs or more will benefit from this at ₹52,500.
  3. Additionally, the government introduced an optional income tax regime in the 2020-21 Budget. Individuals and Hindu Undivided Families (HUFs) opting for this regime would be taxed at lower rates if they did not avail of specified exemptions and deductions such as house rent allowance (HRA), interest on the home loan, and investments made under Section 80C, 80D, and 80CCD.
  4. The enhancement of the tax rebate limit to ₹7 lakhs from ₹5 lakhs implies that individuals whose income is less than ₹7 lakhs need not invest anything to claim exemptions. Their entire income would be tax-free, regardless of the amount of investment made.
  5. Income tax slabs have undergone significant changes, with new tax rates as follows: nil for income up to ₹3 lakhs, 5% for income between ₹3 lakhs to ₹6 lakhs, 10% for income between ₹6 lakhs to ₹9 lakhs, and 30% for income above ₹15 lakhs.
  6. The leave encashment for non-government employees is exempt up to a certain limit, which was ₹3 lakhs in 2002 and has now increased to ₹25 lakhs.
  7. Investments made in debt mutual funds after April 1, 2023, will be taxed as short-term capital gains. This change will strip investors of the long-term tax benefits that had made such investments popular. Additionally, investments in Market Linked Debentures (MLDs) after April 1 will also be short-term capital assets. The grandfathering of earlier investments will end, and the mutual fund industry will be slightly impacted.
  8. Life insurance premiums over the annual premium of ₹5 lakhs would be taxable from the new financial year, which is from April 1, 2023. However, the new income tax rule will not apply to ULIP (Unit Linked Insurance Plan).
  9. Senior citizens will benefit from increased deposit limits for the senior citizen savings scheme and monthly income scheme. The maximum deposit limit for the former will be increased to ₹30 lakhs from ₹15 lakhs. For the latter, the maximum deposit limit for single accounts will increase to ₹9 lakhs from ₹4.5 lakhs, and for joint accounts, it will increase to ₹15 lakhs from ₹7.5 lakhs.
  10. Lastly, converting physical gold to an Electronic Gold Receipt (EGR) and vice versa will not attract any capital gain tax, effective April 1, 2023. These changes in income tax rules will have a significant impact on taxpayers, and it is advisable to consult with a financial expert to make informed decisions regarding tax planning and investment strategies.

The financial year of 2023 has brought numerous changes to income tax rules in India. Among the significant changes are the new income tax regime, tax rebate limit increase, the elimination of LTCG tax benefits on some debt mutual funds, and alterations to income tax slabs. The changes have now come into effect for everyone in the country. What will be the results of these changes? Only time will tell.

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Finance

FM Rolls Out Loan Guarantee Scheme To Revive The Worst-hit Travel & Tourism Sector

FM Rolls Out Loan Guarantee Scheme To Revive The Worst-hit Travel & Tourism Sector
FM Rolls Out Loan Guarantee Scheme To Revive The Worst-hit Travel & Tourism Sector

Due to the Covid-19 induced pandemic, the tourism sector across the globe has been affected badly. Not only it has been downhill since 2020 due to imposed guidelines and travel restrictions, but it is still on its knees trying to find its balance.

The Finance Minister of India Nirmala Sitharaman, on Monday, announced a new 100% guaranteed loan scheme that will be provided to registered tourist guides and other travel and tourism stakeholders who are facing a financial crisis.

Tourist guides who are registered at the regional or state level and are licensed can get loans up to INR 1 Lakh with a guarantee. A total of 10,700 regional level tourist guides are recognized by the Minister of Tourism and state governments would benefit from the scheme.

Loans with an upper limit of INR 10 Lakh would be available with a 100% guarantee to travel and tourism stakeholders such as travel agencies. Around 904 stakeholders are recognized by the Ministry of Tourism who are eligible for this loan guarantee scheme.

The Finance Minister said that under the new loan guarantee scheme for Covid affected sectors, working capital or personal loans will be provided to people in the tourism sector to discharge liabilities and restart businesses impacted due to Covid-19.

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MSME

Union Budget 2021: Here Is What the First Paperless Budget Has In Store for the MSME Sector

union budget-2021
Union Budget 2021-22 | Representational Image

Union Finance Minister Nirmala Sitharaman on Monday presented the central government’s Budget for the upcoming financial year 2021-22 in the Parliament. The MSME sector got a fair share of the estimated public expenditure for the next fiscal year set to begin from April 1 this year. In the budget unveiled today in Lok Sabha, Sitharaman has allocated a fund of over Rs 15,000 Crore to the Micro, Small and Medium Enterprises, which stands at double the amount apportioned to the sector last fiscal. “We have taken a number of steps to support the MSME sector in this budget. I have provided Rs 15,700 crore more than double the previous year,” said the Finance Minister. Union Budget 2021: How the post-COVID Budget will Impact the Corporates & Common Taxpayers?

The budget has also slashed the custom duty rates on various commodities to support the MSMEs affected by the COVID-19 induced economic slowdown. Customs duty on semis, flat, and long products of non-alloy, alloy, and stainless steels has been reduced to 7.5 per cent uniformly as per the Union Budget for 2021-22.  “To provide relief to metal recyclers, mostly MSMEs, I am exempting duty on steel scrap for a period up to March 31, 2022. Further, I am also revoking ADD and CVD on certain steel products,” said Nirmala Sitharaman.

The custom duties on steel screws and plastic builder wares has been increased from 10 per cent to 15 per cent while on prawn feed it has increased to 15 per cent from the existing 5 per cent. Meanwhile the duty on cooper scrap has been halved from 5 per cent to 2.5 per cent. For MSMEs dealing in the textile industry,  nylon chain has been made in par to polyester and other artificial fabrics as part of easing duty on raw materials and inputs.Union Budget 2021: Healthcare, Infrastructure will remain in the limelight!

In order to provide budgetary incentives to the promoters and exporters of garments, leather and handicraft products that are in the MSME sector, Nirmala Sitharaman announced the withdrawal of exemptions on imports of some types of leathers as they are manufactured domestically in quality and quantity.

Apart from the above measures, the finance minister has announced the establishment of a special framework for MSMEs for debt resolution. To resolve cases faster, the NCLT framework will also be strengthened including the implementation of the e-Courts system from the businesses in the sector. An additional year of tax holiday has also been provided to the affordable housing business.

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Finance

FY Budget 2021-22: FM Sitharaman Says the Upcoming Budget will be like Never Before!

The finance minister Nirmal Sitharaman on Wednesday concluded all the pre-budget consultations for the 2021-2022 Union Budget. 9 stakeholder groups and 170 invitees participated in the 15 meetings held between December 14 to December 23rd, 2020 online.

The Finance minister of India held a meeting with the sector experts related to infrastructure, energy, and climate change to sought suggestions regarding the upcoming budget. According to her recent statement, the upcoming budget will be completely different. The Union Budget for 2021-2022 will be presented under the shadow of the Covid-19 pandemic. The budget for the financial year 2021-2022 will be presented in the parliament on February 1, 2021.

 

The FY22 budget will focus mainly on the infrastructure, which is considered one of the most important parameters of growth. Many economists have predicted that the Indian economy will shrink by 7% to 9% in 2020-21. The finance ministry expects marginal growth in the economy from the December quarter. The Indian economy is also expected to bounce back in double digits on a low base.

 

Apart from the Finance Minister Nirmala Sitharaman, Union Minister of State for Finance and Corporate Affairs Anurag Singh Thakur, DIPAM Secretary Tuhin Kanta Pandey, Finance Secretary AB Pandey, Expenditure Secretary TV Somanathan, Chief Economic Advisor Krishnamurthy Subramanian, DEA Secretary Tarun Bajaj, and senior officers from the Ministry of Finance and other ministries also took part in the meeting.

 

Sitharaman had chaired all the pre-budget meetings that were held online with multiple stakeholders, industrialists, economists, and farmer bodies, etc. for their inputs and suggestions on how to revive the economy that has been severely affected by the coronavirus pandemic.

 

The stakeholder groups made multiple suggestions on various subjects that included Fiscal Policy (including taxation), Insurance, Bond Markets, Health & Education, Exports, Infrastructure Spending, Social Protection, Water Harvesting & Conservation, MGNREGA, Public Distribution System, Production-linked Investment Scheme, Ease of Doing Business, Branding of Made in India products, Public Sector Delivery Mechanisms, Innovation, Green Growth, and Non-Polluting sources of Energy and Vehicles, among others.

 

The stakeholders’ groups included representatives of the Health, Financial and Capital Markets, Education and Rural Development, Trade Unions and Labour Organisations, Water and Sanitation, Industry, and Trade, Services, Infrastructure Agriculture, Energy, and Climate Change sector, and Industrialists, Agro-Processing Industry, and Economists.

 

The Finance Ministry also said “the participants in the meeting lauded the efforts taken by the Indian government to flatten the COVID-19 curve a slow but strong recovery of the economy in the second quarter of 2020-21. They further stated that India is among very few countries whose economic activity has risen with declining pandemic induced fatalities”.