New Tax Law Changes: Everything You Should Know
April 29, 2024 / Rate Adjustments For The New Tax Regime, In What Ways Do The Most Recent Tax Regime Rates Outperform The Previous One?, Income Tax Returns, New Tax Regime, New Tax Regime Rates, Union Budget 2023, Individuals and Hindu Undivided Families (HUFs), Who May Choose the New Tax Scheme?
The Union Budget of 2020 included the introduction of the new tax slabs. The income tax slab rates are lower under this tax regime, and the person choosing to choose for it will have to forfeit most of the deductions.
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Who is eligible for the New Tax Slabs of Regime?
For the new tax regime slabs, only individuals and Hindu Undivided Families (HUFs) may choose. Put otherwise, this tax structure is not available to trusts, businesses, associations of persons, partnership firms, or juristic persons.
Has the New Tax Regime undergone any modifications?
Even though the new tax system was unveiled in the 2020 Union Budget, it has experienced several modifications in the 2023 Union Budget. The following are the modifications:
1) Conventional deduction
The standard deduction was not available in the earlier version of the new tax law. In other words, the people were unable to deduct the normal amount from their income. However, individuals can now claim this standard deduction, valued at Rs. 50,000, thanks to the Union Budget 2023.
Furthermore See: Union Budget 2023: A Brief Overview of Direct Tax Changes
2) The default tax system
When submitting an income tax return, the new tax regime will now be the default tax system. The individual will have to explicitly choose the option to file his ITR under the previous tax system, nevertheless.
3) Variations in Slab Rates for Income Tax
There were different income tax slab rates under the previous new tax scheme. This used to cause a great deal of misunderstanding among the populace. As a result, the government changed the Income Tax Slab rates to make things easier. Additionally, the most recent changes to the tax regime's slab rates have resulted in a decrease in tax liability.
4) Fundamental upper limit of exemption
The basic exemption ceiling has been raised from Rs. 2.5 lacs to Rs. 3 lacs under the most recent tax regime. However, under the previous tax system, this cap—Rs. 2.5 lacs—remains the same.
See Also: Recognise The Differences Between The Old And New Tax Regimes' Deductions
5) Refund
In addition to the aforementioned, the new tax system has raised the rebate limit from Rs. 5 lacs to Rs. 7 lacs. This means that the individual choosing the new tax regime will not be required to pay any tax on his income if it is less than Rs. 7 lacs. However, this cap—Rs. 5 lacs—remains the same under the previous tax system.
6)Surcharge
Lastly, the maximum surcharge rate is now 25% instead of 37% under the most recent revised tax scheme. It goes without saying that this rate—37 percent—was the same under the previous tax system.
Union Budget Surcharge Rates for 2023
Justifications for Modifying the New Tax Regime Rates
The following are potential justifications for altering the rates under the new tax regime:
First, to make it easier for individuals to file their taxes.
To guarantee that an increasing number of individuals file income tax returns.
- Lastly, to offer the largest possible tax refund.
Alright! This can be effectively clarified by using the following
It is safe to conclude from the preceding example that filing an ITR using the most recent rates under the new tax regime will result in a lower tax liability.
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