Income Tax News: Key Changes Explained! Here's How 2023's New Income Tax Rules Will Impact Your Finances in 2024

Income Tax News: In the Union Budget of 2023, the Indian government unveiled a number of new income tax regulations. The New Income Tax Regime's designation as the default tax regime was one of the major announcements pertaining to personal taxes.

Empowering Taxpayers

Union Finance Minister Nirmala Sitharaman said in her budget speech for 2023–2024 that budget proposals under the new income tax regime will leave more money in the hands of the people and that it is their decision as to where to invest their money, not the government's, to do so.

New Tax Regime

Announcing the new tax Regime was Budget 2020. From April 2020 to March 2023, the new tax system was voluntary. The Union Budget 2023 established it as the default system. FM According to Sitharaman, taxpayers will still be able to use the previous tax regime; however, if they fail to indicate which tax regime they want for TDS from their salary or when filing their income tax return, the income tax will be computed using the income tax slabs under the new tax regime.

New tax slabs

Income tax slabs under the new tax regime were modified to make it more enticing and taxpayer-friendly.

Income Tax Rebate

Individuals with annual incomes up to Rs 5 lakh were exempt from paying any taxes prior to the Union Budget 2023. This cap was increased to Rs 7 lakh.

Standard deduction under New Tax Regime

In the Union Budget 2023, the standard deduction of Rs 50,000—previously limited to the Old Tax Regime—was expanded to include the new tax regime. The tax-free income, including the rebate, is now Rs 7.5 lakh as a result of the inclusion.

The debt mutual fund's LTCG benefit was eliminated

According to the Centre, investments made in debt mutual funds after March 31, 2023, will not be subject to withdrawal taxes on long-term capital gains. This implies that the income slabs of taxpayers will determine how capital gains on debt mutual fund units are taxed. The gains are not subject to indexation-based LTCG taxation.In the past, bank FDs did not offer the LTCG tax benefit to debt MFs. Investments made in debt mutual funds through March 31, 2023, will be subject to taxation under the previous LTCG tax regulations.

Life insurance maturity money taxes

According to the Centre, the maturity proceeds of life insurance policies will not be entirely free from income tax. The maturity amount will be taxable under the new rule if the total premium paid on all non-ULIP life insurance policies exceeds Rs 5 lakh in a financial year.

According to the CBDT, the taxable maturity amount will only be determined if the life insurance policies satisfy certain requirements, like the total premium paid for one or more non-ULIP insurance policies.If the premium for a ULIP policy is paid in more than Rs 2.5 lakh during a given financial year, the maturity amount is taxable.

IT returns discarded

The Income Tax department unveiled the Discard return option in 2023, enabling people to fully erase their unverified ITR. With this, taxpayers can make changes and remove their previously submitted, unverified ITR. In the end, this would assist the taxpayers in fixing the mistakes made prior to the verification procedure.

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