- Advertisement -
HomeCURRENT AFFAIRSBUSINESSFrom Income Tax to Mutual Funds, Get Ready for These Financial Changes...

From Income Tax to Mutual Funds, Get Ready for These Financial Changes Starting April 1st

New financial rules for 2023: The fiscal year 2022–23 is soon to come to a conclusion. Many new income tax regulations will be in effect starting on April 1 for the fiscal year 2023–24. The Budget 2023’s announcements will take effect on April 1st. Here is a list of significant changes that will take effect in the new fiscal year, ranging from adjustments to income tax slabs to post-office programmes.

Government introduced a new tax system in Budget 2020–21

The new income tax system will be the default tax system, but taxpayers will still have the option to opt for the old system, as declared by Finance Minister Nirmala Sitharaman. The tax rebate threshold was increased under the new tax regime from Rs 5 lakh to Rs 7 lakh, even though the new regime also offers few exemptions. It should be noted that the government introduced a new tax system in Budget 2020–21, under which individuals and Hindu Undivided Families (HUFs) would be subject to lower rates of taxation if they did not take advantage of certain exemptions and deductions, such as the house rent allowance (HRA), mortgage interest, and investments made under Section 80C, 80D, and 80CCD.

Restrict the income tax exemption from the payouts of extremely valuable insurance contracts

Under the former tax structure, employees were eligible for a baseline deduction of Rs 500,000. Also, the standard deduction will be made available to retirees under the new tax system, according to the finance minister. For taxable income over Rs 15.5 lakhs under the new tax system, the standard deduction is Rs 52,500. The leave encashment limit for non-government employees was raised in the Budget 2023 from Rs 3 lakh to Rs 25 lakh. Revenue from insurance policies with premiums of more than Rs 5 lakh will be subject to tax in the fiscal year 2023–24. The idea aims to restrict the income tax exemption from the payouts of extremely valuable insurance contracts.

Debt mutual funds do not receive long-term capital gains (LTCG) benefits

Fixed deposits will no longer have a major tax advantage over debt mutual funds. From April 1, capital gains from debt mutual funds that hold less than 35% of their assets in domestic stocks will be subject to income tax. Currently, if units are held for more than three years, capital gains on debt funds are considered long-term. These long-term capital gains (LTCG) are taxed at 20% after indexation, which lowers the overall tax burden. This benefit will stop being offered on April 1.

Must Read: Hindu Doctor Shot Dead in Karachi, Second Attack on Medical Professionals in Pakistan

Market Linked Debentures (MLDs)

The taxation of capital gains on market-linked debentures (MLDs) as short-term capital gains was also announced on February 1. The impact on high net worth individuals and families will be significant. High-net-worth individuals commonly prefer MLDs because of the advantageous tax treatment MLDs receive. Listed financial instruments known as market-linked debentures are now taxed at a long-term capital gain (LTCG) rate of 10% without indexation.

Conversion of gold won’t trigger capital gains tax

The finance minister also stated in the Budget 2023 that there will be no capital gains tax if physical gold is converted to electronic gold (also known as e-Gold) or vice versa.

Must Read: Commerce Minister Piyush Goyal announces ambitious goal of $2 trillion in exports by 2030

Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOKINSTAGRAMand TWITTER.

Enter Your Email To get daily Newsletter in your inbox

- Advertisement -

Latest Post

Latest News

- Advertisement -