Here are the ten big income tax rule changes that will come into effect from April 1

Mar 29, 2023

By: Rounak Jain

Credit: Canva

New tax regime to become the default

The new tax regime will become the default from April 1, 2023. However, tax payers will still have the option to opt for the old tax regime.

Credit: Canva

Increased tax rebate limit

The tax rebate limit will be increased to ₹7 lakh from the existing ₹5 lakh from April 1, 2023. This means income below ₹7 lakh will be tax-free, but it will only be available under the new tax regime.

Credit: Canva

New tax regime to become the default

The new tax slab rates will come into effect from April 1, 2023. They are – ₹0 to ₹3 lakh – nil | ₹3 to ₹6 lakh – 5 percent | ₹6 to ₹9 lakh – 10 percent | ₹9 to ₹12 lakh – 15 percent | ₹12 to ₹15 lakh – 20 percent | above ₹15 lakh – 30 percent.

Credit: Canva

Surcharge under new tax regime

For taxpayers in the new tax regime, the surcharge on individuals with income exceeding ₹5 crore has been reduced from 37 percent to 25 percent.

Credit: Canva

Standard deduction

Salaried individuals under the new tax regime will now be able to claim a standard deduction of ₹50,000.

Credit: Canva

LTA encashment limit

The leave travel allowance (LTA) encashment limit for non-government salaried individuals has been increased from ₹3 lakh to ₹25 lakh from April 1, 2023.

Credit: Canva

LTCG tax benefit removed from debt mutual funds

The long-term capital gains (LTCG) tax rate of 20 percent and the indexation benefits on investments in debt mutual funds has been eliminated. Gains made on debt mutual funds will now be taxed at income tax rates applicable to the taxpayer.

Credit: Canva

Life insurance policies

Tax exemption on maturity of life insurance policies will not be available if the aggregate annual premium exceeds ₹5 lakh. If the premium exceeds this limit, the proceeds will be added to the income of the taxpayer and taxed at applicable rates. The new rule will not be applicable to unit-linked insurance plans (ULIPs).

Credit: Canva

Increase in benefits for senior citizens

The benefits for senior citizens will increase from April 1, 2023. The limit for Senior Citizen Savings Scheme has been increased to ₹30 lakh from ₹15 lakh. The deposit limit for Post Office Monthly Income Scheme has been increased to ₹9 lakh (from ₹4.5 lakh) for single accounts, and to ₹15 lakh (from ₹9 lakh) for joint accounts.

Credit: Canva

Gold conversion

The conversion of physical gold to electronic gold receipt and vice versa will not attract any capital gains tax from April 1, 2023.

Credit: Canva

This is how big your $1 million home would be in top cities