The new financial year is going to start from 1st April. New changes related to tax also come into effect from this day. This time, rules related to new and old tax regime are also going to be implemented from April 1. Let us know which tax related changes can benefit you and which can harm you.
Now there is not much time left for the financial year 2023-24 to end. The new financial year will start from April 1st. This day is very important, because most of the changes related to personal finance come into effect from this day. Most of the announcements made in the budget also come into effect from this day.
This time also some important changes are going to happen from April 1, let us know about them.
New tax regime will be default
If you have not yet chosen between the old tax regime and the new tax regime, then quickly choose the method of filing tax as per your convenience. If you do not choose either of the two by March 31, you will automatically move to the new tax regime.
In the new tax system, you will not have to pay any tax on earnings up to Rs 7 lakh. But, if you want to save tax by investing, the old tax regime may be better for you.
Standard deduction now in new tax regime
Earlier, standard deduction of Rs 50 thousand was applicable in the old tax regime. Now it has been included in the new tax regime. Under standard deduction, tax exemption is available on Rs 50 thousand, which means you can deduct Rs 50 thousand from your salary without thinking anything.
This reduces your taxable income. Some people benefit so much from this exemption that no tax is levied on them with the rebate under Section 87A of the Income Tax Act. Those with total income less than Rs 5 lakh get exemption under Section 87A up to Rs 12,500.
Private employed people get tax benefits here
If you work in the private sector and take less leave, then you are going to get more tax exemption on the money you receive in lieu of leave. Earlier, if a non-government employee took money from the company in exchange for his remaining leave, then only the amount up to Rs 3 lakh was tax-free. But, now this limit has been increased to Rs 25 lakh.
Those earning more than Rs 5 crore will save more tax
From April 1, those with annual income of more than Rs 5 crore will also get huge benefits. The government has reduced the surcharge on income above Rs 5 crore by 12 percent. Earlier it was 37 percent, which will become 25 percent from April 1. However, this benefit will be available only to those people who choose the new tax system.
Tax on maturity income of insurance policy also
Now tax will have to be paid on the maturity income received from life insurance policy. This has been announced by Finance Minister Nirmala Sitharaman. Whatever policies are issued on or after April 1, 2023, will come under the purview of this rule. However, this tax will have to be paid only by those people whose total premium is more than Rs 5 lakh.
