Union Budget: In a couple of hours Finance Minister Nirmala Sitharaman will be presenting her seventh consecutive Budget, which would be the first for the Modi 3.0 government. In the first and the second term of the BJP=led NDA government brought in some crucial tax-related reforms.
At present, we have two tax regimes: Old Tax Regime and New Tax Regime. In the Union Budget 2023, notable modifications were made to the latest personal tax system. These changes encompassed a rise in the fundamental exemption threshold from Rs 2.5 lakh to Rs 3 lakh and a decrease in the surcharge for individuals earning more than Rs 5 crore from 37% to 25%. The primary objective behind these alterations was to enhance the appeal of the fresh tax structure. Despite these adjustments, the tax rates for the previous system have not been modified, underscoring a distinct requirement for significant revisions to its tax brackets.
In the upcoming budget, significant changes in the tax structure, including an increase in the standard deduction under the new tax regime, are anticipated.
Here's a quick look at the key changes in the Budget presented by the NDA government
UNION BUDGET 2020-21 > Simplify tax structure, stimulate growth > Middle-class relief. > New regime optional. > Pre-filled returns for simplicity. > Estimated revenue forgone: Rs. 40,000 crore/year > 15 per cent rate for new electricity companies > Competitive global rates > DDT removed > Deduction for subsidiary dividends > Estimated revenue forgone: Rs. 25,000 crore/year > 100 per cent deduction for 3 of 10 years > ESOP tax payment deferred > Audit threshold increased to Rs. 5 crore > Parity with corporate sector for cooperatives > 100 per cent tax exemption for Sovereign Wealth Funds > Extra deduction till 31st March 2021 > Extended approval date for tax holiday > Online PAN via Aadhaar > ‘Vivad Se Vishwas’ for tax litigations > Faceless appeals and Taxpayers’ Charter > Charity institutions: E-filing, URN issuance, provisional registration > Amendments to benefit from unabsorbed losses and depreciation after amalgamation
UNION BUDGET 2021-22
* Corporate tax rate among the world's lowest * Eased taxation for small taxpayers * Doubled return filers to 6.48 crore in 2020 * Introduced Faceless Assessment and Appeal * Exempted senior citizens over 75 from filing tax returns * Reduced case reopening time to 3 years * Set up Dispute Resolution Committee * Established National Faceless IT Appellate Tribunal Centre * Rs 85,000 crore tax disputes settled via Vivad Se Vishwas * Relief for NRIs facing issues with foreign retirement accounts * Increased turnover limit for digital transactions to Rs 10 crore * Exempted REIT/InvIT dividends from TDS * Allowed Infrastructure Debt Funds to issue Zero Coupon Bonds * Extended tax benefits for affordable housing projects * Tax incentives for IFSC in GIFT City * Pre-filled returns for capital gains, dividends, etc. * Raised limit for small charitable trusts to Rs 5 crore * Disallowed deduction for late employee contribution deposits * Extended tax holiday eligibility for startups * Extended capital gains exemption for startup investments till March 2022
UNION BUDGET 2022-23 > Vision for a reliable tax system > Simplified tax structure, reduced litigation > Introduction of 'Updated Return' > Alternate Minimum Tax reduced from 18.5 per cent to 15 per cent > Surcharge reduced from 12 per cent to 7 per cen for income between Rs 1 crore and Rs 10 crores > Annuity/lump sum allowed for differently abled dependents > Applicable to parents/guardians at age 60 > Deduction limit increased from 10 per cent to 14 per cent for State Govt. employees > Parity with central govt. for social security benefits > Incorporation period extended to 31.03.2023 > Tax benefits for eligible start-ups > Last date for manufacturing under section 115BAB extended to 31.03.2024 > Specific tax regime introduced > 30 per cent tax on income from asset transfer > 1 per cent TDS on payments above threshold > Appeal filing deferred for identical questions of law > No set-off for loss against undisclosed income > Exemption for non-residents' income > Surcharge rationalisation > No set-off for loss against undisclosed income > Taxable treatment of benefits to agents > Deduction for giver if value exceeds Rs 20,000 in the financial year
UNION BUDGET 2023-24 > New Tax Regime Changes: The new tax regime has become the default regime. > The new tax regime has implemented increased tax rebates under Section 87A, raising the tax rebate to Rs. 25,000 for taxable incomes up to Rs. 7 lakhs. This effectively makes income tax zero for many individuals in this bracket under the new regime. > Moreover, the new regime has raised the basic exemption limit and increased tax slabs, aiming to benefit lower and middle-income earners. > Rebate limit of Personal Income Tax to be increased to Rs. 7 lakh, which was at Rs. 5 lakh in the new tax regime > Individuals in the new regime with income up to Rs. 7 lakh will not pay any tax > New personal income tax regime introduced in 2020 with six income slabs > Proposed change to reduce the number of slabs to five > Increase tax exemption limit to Rs. 3 lakh
|
Old Tax Regime (FY 2022-23 and FY 2023-24) |
New Tax Regime |
||||
|
Income Slabs |
Age |
Age of 60 Years to 80 years |
Age above 80 Years |
FY 2022-23 |
FY 2023-24 |
|
Up to ₹2,50,000 |
NIL |
NIL |
NIL |
NIL |
NIL |
|
₹2,50,001 - ₹3,00,000 |
5% |
NIL |
NIL |
5% |
NIL |
|
₹3,00,001 - ₹5,00,000 |
5% |
5% |
NIL |
5% |
5% |
|
₹5,00,001 - ₹6,00,000 |
20% |
20% |
20% |
10% |
5% |
|
₹6,00,001 - ₹7,50,000 |
20% |
20% |
20% |
10% |
10% |
|
₹7,50,001 - ₹9,00,000 |
20% |
20% |
20% |
15% |
10% |
|
₹9,00,001 - ₹10,00,000 |
20% |
20% |
20% |
15% |
15% |
|
₹10,00,001 - ₹12,00,000 |
30% |
30% |
30% |
20% |
15% |
|
₹12,00,001 - ₹12,50,000 |
30% |
30% |
30% |
20% |
20% |
|
₹12,50,001 - ₹15,00,000 |
30% |
30% |
30% |
25% |
20% |
|
₹15,00,000 and above |
30% |
30% |
30% |
30% |
30% |
Source: ClearTax