New income tax regime, other rules to kick in from Apr 1: What taxpayers need to know

As is the case with each financial year (FY), the upcoming FY (2023-24) will also begin on April 1. The announcements made by finance minister Nirmala Sitharaman in the annual Feb 1 budget, too, will come into effect as part of the new financial year. In Budget 2023, one of her announcements pertained to the old and new income tax regimes.

Also Read: Everything To Know About the New Income Tax Regime 2023

What did Sitharaman announce?

The minister announced changes to tax slabs under the new regime, adding, however, that taxpayers will still be able to select the regime under which they want to file their returns. In case no choice was made, the new tax regime will be default, she said.

Also Read: Confused about old and new income tax regime? Here’s a dedicated calculator

What to know about the new tax rules?

Speaking to HT’s sister publication Mint, Abhishek Soni, co-founder and CEO, Tax2Win, explained what citizens must know about the new tax rules. “As we usher in the new financial year, and bid farewell to FY 2022-23, we can expect some significant changes coming into effect from April 1, 2023. These changes will involve the introduction of new rules or reforms to existing ones, as announced by the finance minister, in the Budget 2023,” said Soni.

Here are a few things one must know about the new rules, as per Abhishek Soni:

(1.) The increase of basic exemption limit (from ₹2.5 lakh to ₹3 lakh) is to make the new regime more ‘attractive.’ The highest rate of 30% will be levied on annual salary of more than ₹15 lakh.

(2.) The surcharge rate has been reduced from 37% to 25% for those earning more than ₹5 crore annually. Under the new regime, however, this 25% rate is for individuals with yearly income exceeding ₹2 crore.

(3.) Individuals and Hindu Undivided Families (HUFs) can choose between the regimes in every FY (if there is no business income). For those with business income, on the other hand, there will be only one chance to return to the old regime, if they opted for the new one.

(4.) Section 87A rebate is available under both. Also, for those confused which one to opt for, the Income Tax Department has launched a ‘calculator.’

(5.) Under a proposal to introduce a standard deduction in the new regime (no changes made for the old one), people will benefit from a standard deduction of ₹50,000.