Latest Tax Slabs
The Indian government has recently announced the latest income tax slabs for the financial year 2023-2024. These slabs determine the amount of tax payable by individuals and vary based on their income. The new income tax slabs aim to reduce the tax burden on individuals, especially in light of the ongoing COVID-19 pandemic.
The latest income tax slabs for the financial year 2023-2024 are as follows:
- Individuals with an annual income of Rs. 2.5 lakh or less are exempt from tax.
- Individuals with an annual income between Rs. 2.5 lakh and Rs. 5 lakh will be taxed at a rate of 5%.
- Individuals having an annual earning of less than Rs. 5 lakh but more than Rs. 7.5 lakh will be taxed at a rate of 10%.
- Individuals with an annual income between Rs. 7.5 lakh and Rs. 10 lakh will be taxed at a rate of 15%.
- Individuals with an annual income between Rs. 10 lakh and Rs. 12.5 lakh will be taxed at a rate of 20%.
- Individuals with an annual income between Rs. 12.5 lakh and Rs. 15 lakh will be taxed at a rate of 25%.
- Individuals with an annual income above Rs. 15 lakh will pay tax at a rate of 30%.
It's important to note that these rates are only applicable to individuals who do not opt for any deductions or exemptions. In case an individual opts for deductions, they can lower their taxable income and thereby reduce the tax payable.
Apart from the new income tax slabs, the government has also introduced a few other changes in the tax laws that are expected to impact taxpayers.
Some other changes in Tax Laws
Tax on Interest earned from Provident Funds:
The government has announced that from the financial year 2023-2024, the interest earned on the contribution to the Provident Fund above Rs. 5 lakh per annum will be taxable. Earlier, the entire interest amount was exempted from tax.
Tax on ULIPs:
The government has also proposed to tax Unit Linked Insurance Plans (ULIPs) on the same lines as equity mutual funds. Under the new proposal, ULIPs with an annual premium of more than Rs. 2.5 lakh will be taxed at 10%. The move is aimed at bringing parity between ULIPs and equity mutual funds, which have been taxed similarly.
Tax on Dividends:
The government has proposed to tax dividends at the hands of the shareholders. The move is aimed at discouraging companies from paying excessive dividends and encouraging them to reinvest the profits into the business. Earlier, dividends were taxed in the hands of the companies, and the shareholders were not required to pay any tax on the dividends received.
TDS on Salary:
The government has also increased the threshold limit for tax deducted at source (TDS) on salary. From the financial year 2023-2024, TDS will be applicable on salaries exceeding Rs. 5 lakh per annum. Earlier, the threshold limit was Rs. 2.5 lakh per annum.
Faceless Assessment and Appeal:
The government has expanded the scope of faceless assessment and appeal. Under the new system, tax assessments and appeals will be conducted without the need for physical interaction between taxpayers and tax officials. The move is aimed at making the tax system more efficient, transparent, and corruption-free.
Tax Incentives for Affordable Housing:
The government has extended the tax incentives for affordable housing. Under Section 80EEA of the Income Tax Act, first-time homebuyers of affordable housing units can claim an additional deduction of up to Rs. 1.5 lakh interest paid on the home loan. The deduction is available till March 31, 2024.
Tax on Crypto Assets:
The government has proposed to impose taxes on income generated from cryptocurrency transactions. Under the proposed system, crypto assets will be taxed similarly to other capital assets, such as stocks and mutual funds. The move is aimed at bringing clarity to the taxation of cryptocurrency and preventing the use of digital assets for illicit activities.
Health Insurance Deduction:
The government has also proposed to increase the deduction limit for health insurance premiums. Under Section 80D of the Income Tax Act, taxpayers can demand a deduction of up to Rs. 25,000 on the health insurance premiums paid for themselves, their spouses, and dependent children. The proposed change aims to increase the limit to Rs. 50,000 for senior citizens.
Tax on Gifts:
The government has proposed to tax gifts received by individuals above a certain limit. Under the proposed system, gifts received above Rs. 1 lakh in a financial year will be taxed at the applicable tax rate. The move is aimed at curbing the practice of high-value gifts being used to evade taxes.
The latest income tax slabs for the year 2023-2024 have been designed to provide relief to individuals and reduce their tax burden. It's important for taxpayers to understand the new income tax slabs and plan their finances accordingly. Taxpayers should also take advantage of available deductions and exemptions to reduce their taxable income and save on taxes. Overall, the new income tax slabs are a welcome change and are expected to benefit a large section of taxpayers in India.
The new income tax slabs and the other changes in the tax laws are aimed at simplifying the tax system, reducing the tax burden on individuals, and promoting transparency and efficiency. It's important for taxpayers to be aware of these changes and plan their finances accordingly. Taxpayers should also take advantage of the deductions and exemptions available to reduce their taxable income and save on taxes. Consulting a financial advisor or a tax expert is advisable to understand the implications of these changes and plan your finances accordingly.