There is a lot of confusion among people regarding the proposed changes for individual taxpayers in the budget speech 2023-2024. Through this report, we explain to you every small and big thing related to the new tax system.
New Delhi: The new tax system will be the default system. The number of slabs has been reduced in this regime. The eligibility for exemption has been increased by amending section 87A, so that up to ₹ 7,00,000 total income will be eligible to claim exemption of ₹ 25,000 or 100% of the amount of income tax. However, certain exemptions/deductions will not be eligible under the new regime. Such as House Rent Allowance under section 10(13A), Leave Travel concession under section 10(5) and deduction under Chapter VI-A.
Reduced surcharge
In respect of Individuals, HUFs, AOPs and AJPs where the total income exceeds ₹5 crore, the applicable surcharge will be 25% instead of the earlier rate of 37%.
Presumptive Income Planning and Audit of Accounts for Small Businesses/Small Professionals
It is proposed to amend section 44AD (Presumptive taxation in case of business) to increase the limit of turnover/gross receipts from ₹ 2 crore to ₹ 3 crore from assessment year 2024-25, where the amount or aggregate amount received in cash during the previous year received in, does not exceed 5% of the total turnover or gross receipts. Also, the limit of gross receipts under section 44ADA (presumptive taxation in case of profession) will be raised from Rs 50 lakh to Rs 75 lakh.
Benefits under section 54 and 54F
An individual or HUF taxpayer can purchase or own a long-term capital asset (a residential house for section 54 and any other long-term capital asset for section 54F) within a period of 1 year before or 2 years after the date of transfer . constructs any residential property in India within a period of 3 years after that date, he is eligible for deduction to the extent of the cost of the new residential house from the capital gain arising from the said transfer. The amendment proposes to impose a limit of ₹10 crore on the maximum amount of deduction.
Exemption of insurance policies – Section 10(10D)
Exemption under section 10(10D) shall not be available in respect of any life insurance policy (other than ULIP) issued on or after the 1st day of April, 2023, if the premiums payable for any year during the term of the policy aggregate ₹ 5 be more than one lakh. However, the amount received on the death of a person will continue to be exempt without any restriction.
Evaluation of residential accommodation of employees
Under a proposed amendment to section 17(2), the method of computing perquisite for residential accommodation provided to employees will be made uniform, and it is expected that the Central Board of Direct Taxes will come out with new rules on this.
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