India gets new Tax slabs; Applicable from 1st Apr 2023

[TheSloth]

*economictimes.indiatimes.com/wealt...unced-in-budget-2023/articleshow/97508804.cms

Synopsis

Currently, there are two income tax slabs from which a salaried individual has to choose one every year. The income tax rates for these slabs are different. The old income tax regime continues with the existing tax exemptions and deductions. The new income tax regime offers lower income tax rates and more slabs with no option of availing tax exemptions and deductions. These tax slabs under the new tax regime has been revised from April 1, 2023. ..​

According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs 5 lakh to Rs 7 lakh. Thus, individuals opting for the new income tax regime and having an income upto Rs 7 lakh will not pay any taxes.

What are the current income tax slabs?
The new tax regime was announced in Budget 2020 and became effective from financial year 2020-21 (April 1, 2020). Currently, a salaried individual gets the option to opt for the old tax regime and continue to avail common tax deductions and tax exemptions. Else, he/she can opt for the new concessional income tax regime, without any common tax deductions and tax exemptions. Under the new tax regime, the individual will forego 70 deduction and tax exemptions, which includes HRA tax exemption, LTA tax exemption, deduction up to Rs 1.5 lakh under Section 80C and so on.

*img.etimg.com/photo/msid-97520911/tax-slab.jpg

 

[omega44-xt]

I'm not sure if not giving deductions to investments is a good idea at all. Like, if in future old regime is completely scrapped, I personally see no incentive to put money in NPS. Many people might not even invest that 1.5 lakh for 80C, except for EPF. In a way the money in PF, NPS & even MFs are good for the economy in long run.

LIC & other insurance company stocks went down, maybe due to this.

Edit: There's this as well

*www.moneycontrol.com/news/business...-took-a-beating-after-fms-speech-9980811.html

 

[TheSloth]

@omega44-xt how did you upload the image like this? I tried both upload from device and url but could not get it.

Deductions under 80C still are available in new regime right?

Under the new tax regime, the individual will forego 70 deduction and tax exemptions, which includes HRA tax exemption, LTA tax exemption, deduction up to Rs 1.5 lakh under Section 80C and so on.

(A) proposal…is to limit income tax exemption from proceeds of insurance policies with very high value,” Sitharaman said. From the new fiscal year 2023-24, earnings from insurance policies having an aggregate premium of more than Rs 5 lakh will not be exempt from income tax.

This does not apply to proceeds received on account of the death of the policyholder.

What do they mean by aggregate premium here? Life Insurance policy say annually cost 30k INR and goes for next 25 years, total premium paid is 7,50,000. Are they saying we can't get exemption on this under 80C because the premium amount is above 5L INR?

 

[Desmond]

@omega44-xt how did you upload the image like this? I tried both upload from device and url but could not get it.

Use the "Attach files" button. Images embedded from URLs don't work currently.

 

[omega44-xt]

@omega44-xt how did you upload the image like this? I tried both upload from device and url but could not get it.

Deductions under 80C still are available in new regime right?




What do they mean by aggregate premium here? Life Insurance policy say annually cost 30k INR and goes for next 25 years, total premium paid is 7,50,000. Are they saying we can't get exemption on this under 80C because the premium amount is above 5L INR?

Same

I was also experimenting on what works in terms of pics. I used snipping tool, then copy & paste, honestly not great.

80C is not available in new regime.

Not exactly sure about insurance one, seems like yes though:

“(A) proposal…is to limit income tax exemption from proceeds of insurance policies with very high value,” Sitharaman said.


The budget explained that where the aggregate of premium for life insurance policies (other than ULIP) issued on or after April 1, 2023 is above Rs 5 lakh, income from only those policies with an aggregate premium of up to Rs 5 lakh shall be exempt.

“This will not affect the tax exemption provided to the amount received on the death of a person insured. It will also not affect insurance policies issued till March 31, 2023,” said the document.

moneycontrol.com/news/business/budget/budget-2023-insurance-stocks-tank-up-to-10-as-fm-pushes-for-new-tax-regime-9980351.html?pitchclick=MarketsAndYou

 

[nac]

Many people might not even invest that 1.5 lakh for 80C, except for EPF. In a way the money in PF, NPS & even MFs are good for the economy in long run.

LIC & other insurance company stocks went down, maybe due to this.

That 1.5L savings aren't available since 2020 for those who chose to go with new regime. The reason for price fall can't be that.

 

[omega44-xt]

That 1.5L savings aren't available since 2020 for those who chose to go with new regime. The reason for price fall can't be that.

Government is pushing for new regime now, earlier old regime was default with option of opting for new. Now new regime is default with option to opt for old. Govt is signalling end of old regime in a way, time will tell.

 

[Desmond]

New regime was good back when my salary was lower. But now that I'm in all the slabs I'll miss the old regime.

 

[TheSloth]

^This. and What do we do with NPS/ELSS investments now that it doesnt save tax.

 

[Nerevarine]

^This. and What do we do with NPS/ELSS investments now that it doesnt save tax.

I think its better to switch to profit making investments now.