Big push for new tax regime in Budget 2023: Who stands to benefit from the new tax rates The revised new tax regime offers a higher tax exemption, raises the threshold for tax rebate and reduces the surcharge for the super rich. Heres how it will impact taxpayers at different income levels
The budget pushed for greater adoption of the new tax regime in a big way by reducing the number of tax slabs, increasing the basic exemption limit to Rs.3 lakh from Rs.2.5 lakh, raising the threshold for full tax rebate and lowering the surcharge for incomes above Rs.5 crore. Those opting for the new tax regime can also claim the Rs.50,000 standard deduction. The threshold for rebate under Section 87A has been raised to Rs.7 lakh from Rs.5 lakh, which means a person earning Rs.7.5 lakh a year will not pay a rupee in tax, taking the standard deduction benefit into account.Those earning above Rs.5 crore a year pay a surcharge of 37% on income tax. This surcharge is only 25% under the new tax regime. The tax measures are expected to leave more money in the hands of taxpayers, boosting consumption and raising demand. Finance minister Nirmala Sitharaman said the government will lose a net revenue of Rs.35,000 crore because of the tax changes, which will leave that much more with taxpayers. Under the proposed structure, the tax outgo of those with incomes of up to Rs.7-8 lakh a year and the superrich earning more than Rs.5 crore annually will come down. But taxpayers between these two ends of the spectrum or those claiming deductions and exemptions of more than Rs.2.5 lakh annually may not find it beneficial.
Financial planners and investment experts are also not very enthused by the proposals. They feel that the intent to phase out the old tax regime or make it irrelevant could backfire. The deduction under Section 80C pushed taxpayers to salt away money in tax-saving investments. The insurance industry is disappointed by the budget, said executives who didn’t want to be named. Life insurance stocks declined 8-12% on Wednesday after the budget proposals were announced.
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Budget 2023 gives Rs 968cr digitisation boost t...123456789101112“The new tax regime will discourage investments by individuals,” says Amit Maheshwari, partner, AKM Global. In her budget speech, Sitharaman said that the new tax regime will henceforth be the default option. However, opting for the new tax regime is voluntary and taxpayers have the choice to stay with the old structure. Even after they choose the new regime, taxpayers will have the option to switch to the old regime. “This option to switch to the old regime will be available to taxpayers even at the time of filing their tax returns,” said Sudhir Kaushik, CEO of Taxspanner.com. The new income tax regime was introduced in 2020 and was aimed at reducing exemptions and easing the compliance burden.WHO STANDS TO BENEFIT FROM THE NEW RATES
The revised new tax regime offers a higher tax exemption, raises the threshold for tax rebate and reduces the surcharge for the super rich. Here’s how it will impact taxpayers at different income levels.
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This story originally appeared on: India Times - Author:Faqs of Insurances
