Today Union Budget 2023 is announced by the honorable Finance Minister Nirmala Sitharaman. The budget contains many points however we are going to discuss the proposed major changes in Direct taxes (Income Tax):
1. Increase Income rebate to 7 lacs from 5 lacs in new tax regime.
Slab rate as per new tax regime:
| Income | Rate | Amount |
| Up to 3 lacs | Nil | 0 |
| Above 3 lacs to 6 lacs | 5% | 15,000 |
| Above 6 lacs to 9 lacs | 10% | 30,000 |
| Above 9 lacs to 12 lacs | 15% | 45,000 |
| Above 12 lacs to 15 lacs | 20% | 60,000 |
| Above 15 lacs | 30% | 30% on Income above 15 lacs |
Let’s understand this with some examples:
Example: Mr. ABC have income of 7lacs in FY 2023-24. Now Mr. ABC is required to pay Income Tax under FY 2023-24?
Answer: No, As per new tax regime, Now person having income upto 7 lacs can claim rebate and not liable to pay Income tax.
Example: Mr. ABC have Gross total income of 7.5lacs in FY 2023-24. Now Mr. ABC is required to pay Income Tax under FY 2023-24?
Answer: Yes, As per new tax regime, Now person having income above 7 lacs are liable to pay Income tax as per new tax regime or old tax regime.
| Income | Rate | Amount |
| Upto 3 lacs | Nil | 0 |
| 3 lacs to 6 lacs | 5% | 15,000 |
| 6 lacs to 7.5 lacs | 10% | 15,000 |
Total tax liable to be pay by Mr. ABC is Rs. 30,000 + ed. cess.
2. Leave Encashment
Limit extend to 25 lacs from 3 lacs in case of Encashment of leaves earned upto 10 months of average salary at the time of retirement in case of an employee other than Central Government or State Government.
3. Standard Deduction
Standard deduction of Rs. 50,000 is propose to be continue in Financial Year 2023-24. Deduction from family pension up to Rs. 15,000 is propose to be continue in Financial Year 2023-24.
4. Higher surcharge rate reduced to 25% from 37% in new tax regime.
5. For Co-operative societies, Higher limit of Rs. 3 crore for TDS on cash withdrawal to be provided.
7. EPF Non PAN cases- TDS rate is reduced from 30% to 20% on taxable portion of EPF withdrawal in Non PAN cases.
8. Income tax benefits to Startups-
- In case of change in shareholing in start-ups, Carry Forward of Losses can be done for 10 years. Earlier it was 07 years.
- For Startups- Date of Incorporation benefits extended from 31-03-2023 to 31-03-2024.
9. Capital Gains
Section 54 and 54F- Capping of 10 crores is provided in case of claiming deduction from capital gains on investment in residential house.
10. TDS on Online Gaming
TDS Threshold limit of 10,000 on Online gaming is removed. Now, tax is required to be pay even if earning is less than 10,000 from gaming.
