Budget 2023-24 Highlights
1. Tax Rebate Limit Revised to ₹7 Lakh
2. New Income Tax Slabs
3. Surcharge Rates Reduced for High-Income Taxpayers
4. Standard Deduction Under New Tax Regime
5. Leave Encashment Exemption Limit
1. The ‘Amrit Kaal’ Vision
Inclusive Development
Last Mile Connectivity
Investment and Infrastructure
Unleashing Growth Potential
Green Growth
Financial Sector
Youth Power
2. Higher Expenditure on Education and Health
3. Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 4.0
4. Savings Scheme for Women
New IEFPA (Investor Education and Fund Protection Authority) integrated portal for unclaimed dividends and shares
Higher deposit limits for government-backed monthly income schemes like POMIS (Post Office Monthly Income Scheme)
The maximum deposit limit for SCSS (Senior Citizen Savings Scheme) increased to ₹30 lakhs from ₹15 lakhs previously
No Capital Gains Tax on converting physical gold into EGR (Electronic Gold Receipt) or vice versa
Under PMGKAY (Pradhan Mantri Garib Kalyan Anna Yojana), the government will continue to offer free food grains to ‘Antyodayas’ and other priority households until the end of 2023
1. Choose Between the Old and New Tax Regime
2. Start Planning Your Finances and Taxes in Advance
3. Save Smart and Invest Smart
Savings Account- Banks like AU Small Finance Bank offer highly competitive Savings Account interest rates with a monthly interest payout option to help customers generate higher returns on their savings.
Fixed Deposits (FDs) – Fixed Deposits continue to be one of India's most popular low-risk investment options. Look for a trusted bank to book your FD for any duration of your choice.
Mutual Funds- There are mutual fund schemes available for every investor. AU Small Finance Bank assists in investing in schemes that best match your risk preference and time horizon by using the AU 0101 App or through your nearest branch.
Government Schemes- You can also consider investing in government-backed schemes like NPS, NSC, PPF, and SCSS to generate steady returns. The newly launched MSSC can also be an excellent choice for women.
Finance Minister Nirmala Sitharaman presented Union Budget 2023-24 in Parliament on February 1, 2023. But what are the biggest Financial Budget highlights for the common person? Take a look
Budget 2023-24 Highlights
Under the old and new income tax regimes, individuals with income of up to ₹5 lakhs are not required to pay any taxes after claiming the standard deduction benefit.
In Budget 2023, this rebate limit has been revised to ₹7 lakhs for the new regime. In other words, if your income in the financial year is up to ₹7 lakhs, you’ll not have to pay any income tax.
Before Budget 2023-24: Tax Rebate Limit of ₹5 Lakh
After Budget 2023-24: Tax Rebate Limit of ₹7 Lakh
*Note- The new income tax regime has now been made the default tax regime. But citizens have the option to use the older regime.
The tax structure of the new income tax regime has also been revised under Budget 2023-24. While the old regime had 5 income categories, the proposed new regime has 6.
Before Budget 2023-24- New Income Tax Regime with 6 Income Categories
Net Taxable Income | Income Tax Slab Rates |
₹0 - ₹2.5 lakh | 0% |
₹2.5 lakh - ₹5 lakh | 5% |
₹5 lakh - ₹7.5 lakh | 10% |
₹7.5 lakh - ₹10 lakh | 15% |
₹10 lakh -₹12.5 lakh | 20% |
₹12.5 lakh -₹2.5 lakh | 25% |
₹15 lakh and above | 30% |
After Budget 2023-24- Proposed New Income Tax Regime with 5 Income Categories
Net Taxable Income | Income Tax Slab Rates |
₹0 - ₹3 lakhs | 0% |
₹3 lakh - ₹6 lakhs | 5% |
₹6 lakh - ₹9 lakhs | 10% |
₹9 lakh - ₹12 lakhs | 15% |
₹12 lakh - ₹15 lakhs | 20% |
₹15 lakhs and above | 30% |
Taxpayers, including individuals and HUFs (Hindu Undivided Families) generating higher income, are required to pay a surcharge on their income tax. The surcharge rate varies for high-income categories. Here are the current surcharge rates-
Net Taxable Income Limit | Surcharge Rates |
Below ₹50 lakh | 0% |
₹50 lakh - ₹1 crore | 10% |
₹1 crore - ₹2 crore | 15% |
₹2 crore - ₹5 crore | 25% |
₹5 crore and above | 37% |
The Union Budget of India 2023-24 has proposed to reduce the surcharge rate of 37% for the highest income slab to 25% from April 1, 2023.
Before Budget 2023-24- Surcharge rate of 37% for taxpayers earning ₹5 crore and above
After Budget 2023-24- The surcharge rate reduced from 37% to 25%
The current new income tax regime does not have any deductions or exemptions under Chapter VIA and Section 10 of the IT Act. Thus, to offer some relief to the taxpayers, Budget 2023-24 has proposed a standard deduction of ₹50,000.
With this deduction, taxpayers with an income of ₹15.5 lakhs or above using the new tax regime can reduce their tax liabilities by ₹52,500.
Before Budget 2023-24- No Standard Deduction in the New Tax Regime Under Chapter VIA and Section 10 of the IT Act
After Budget 2023-24- Standard Deduction of ₹50,000
The leave encashment of up to ₹3 lakh is tax-exempt for state and central government employees when they retire. However, this limit was fixed in 2002 when the highest basic pay was only ₹30,000. As government salaries have significantly increased since then, the limit is revised to ₹25 lakh.
Before Budget 2023-24- ₹3 Lakh Exemption Limit on Leave Encashment
After Budget 2023-24- Exemption Limit on Leave Encashment Revised to ₹25 Lakh
Important Budget 2023-24 Updates
Apart from the significant changes to the tax structure, the Annual Budget of India 2023-24 also included a slew of important updates. Take a look-
According to the Finance Minister, the country is entering into ‘Amrit Kaal,' an era of self-reliance and prosperity. The government's vision for the new era is building a knowledge-based and technology-driven economy with the help of 'Saptarishis' or 7 guiding pillars, which include-
At ₹1.12 lakh crore, Budget 2023-24 has the highest-ever allocation for the education sector. ₹44,094 has been allocated to the Higher Education Department, while ₹68,804 is reserved for the School Education Department. Last year, the allocation was ₹1.04 lakh crore.
Moreover, to facilitate improved healthcare facilities in the country, ₹86,175 crores has been allocated to the Health and Family Welfare Department, and another ₹2,980 crore is allocated to the Health Research Department.
The Finance Minister also announced the launch of PMKVY 4.0 for youth skill development. It’ll include industry partnerships, on-job training, and course alignment with industry needs.
The updated PMKVY scheme will cover various modern courses, like robotics, AI, IoT, mechatronics, drones, 3D printing, and more. Moreover, the government will also establish three AI centres of excellence at prominent institutes to boost AI adoption in the country.
To encourage women to invest, the government is also launching Mahila Samman Savings Certificate (MSSC), a one-time small savings scheme.
Available until 2025, it allows women and girls to deposit up to ₹2 Lakhs and generate a 7.5% p.a. interest rate. MSSC is available for a maximum tenure of 2 years with partial withdrawal flexibility.
Some other annual Indian Budget 2023-24 updates are as follows-
Financial Tips for FY 23-24
Now that budget 2023-24 is here; it's time to rework your finances to ensure maximum tax efficiency. Here are a few tips that can help-
One of the biggest confusions after Budget 2023 is whether one should stick with the older regime or switch to the new regime with a standard deduction of ₹50,000 and tax rebate for income of up to ₹7 lakh. While several taxpayers will switch to the regime owing to the benefits above, the older regime could still prove more beneficial in some cases.
For instance, if you don't invest in products only to save taxes, you can continue with the older regime. For many taxpayers, 80C deductions like PF contributions, the principal component of the home loan, and the tuition fee of two children are adequate to claim the maximum deduction limit. As the new regime does not offer these deductions, you can consider the older regime.
Most taxpayers wait until the last month to plan their taxes. However, it’d be prudent to begin planning in April, the first month of the financial year. This is especially true for taxpayers who want to use the older regime.
The Union Budget 2023-24 has made the new regime the default tax regime. So, if you are a salaried employee and don't discuss your tax preference with your employer, your taxes will be computed per the new regime. Also, remember that salaried taxpayers can switch between the old and new regimes every financial year.
No matter your tax regime, you must save and invest smartly to strengthen your finances and achieve your objectives. The products you choose will depend on factors like age, risk appetite, and investment objectives.
Some of the options you can consider are-
Budget 2023-24: Towards a More Prosperous India
The recent Annual Budget of India is expected to propel the country's growth and development. There have been significant changes to income tax laws, fulfilling the expectations of most taxpayers to a great extent. Consult with a tax professional to take maximum advantage of all the changes introduced in Budget 2023.
AU Small Finance Bank offers an extensive range of high-interest Savings Accounts and Term Deposits to help customers make the most of their savings and investments. The largest SFB in India also offers seamless online access to Retail Loans, Mutual Funds, Insurance, and Government Schemes like NPS and APY, making it a one-stop solution for all your banking and investment needs.
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