The current financial year is just a few days away. The new financial year will start from April 1, 2023. In this case, it is important for taxpayers to be aware of the upcoming changes in tax policies. In the budget for the financial year 2023-24, Union Finance Minister Nirmala Sitharaman announced some changes in tax policies. They are said to be effective from April 1.

It is known that the benefits to the common man were announced in the Budget 2023-24 presented by the Central Government on February 1. While the entire country was waiting for an increase in the income tax exemption limit, the announcement of the increase in income tax exemption came as a relief to many.

With the new financial year starting from April 1, 2023, all the new changes will come into effect from that day. These mainly include slab rates, standard deduction limit, tax deducted at source. Here’s what taxpayers need to know about the new rules.

Change in Taxation…

In the Budget 2023-24, the Central Government has made some changes in the tax levies targeting the middle class. Earlier 6 tax slabs have been reduced to 5. Rs. Income up to 3 lakhs is tax free.

5% tax from Rs.3 to 6 lakhs, 10% from Rs.6 to 9 lakhs, 15% from Rs.9 lakhs to 12 lakhs, 20% from Rs.12 lakhs to 15 lakhs, 30% above Rs.15 lakhs % tax to be paid. These new rules will come into effect from April 1 of the new financial year.

Changes in discount…

Earlier, the income tax threshold under the old and new tax rules was Rs.5 lakh. Now the tax evasion limit has been raised to Rs 7 lakh in the new tax regime. This means that employees with an annual income of up to Rs 7 lakh do not have to pay any tax.

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A rebate can be availed under Section 87A of the new tax regime. That is, in the new tax system, you can get a maximum discount of up to Rs.25 thousand. It will be applicable for the financial year 2023-24. Taxpayers should be aware of changes in exemption rules from April 1.

Standard Exemption..

The Union Finance Minister mentioned the issue of standard deduction under the new tax regime announced in the Union Budget 2023-24. Employees earning salary above Rs.15.5 lakhs will get Rs. 52, 500 can be availed as tax relief.

There has been no change in the standard deduction of Rs 50,000 provided under the old tax system. However, to encourage taxpayers to switch to the new tax regime, the Income Tax Department is offering a TDS of Rs.50,000 without the need to submit bills to the administration.

TDS for EPF Withdrawal..

Union Finance Minister Nirmala Sitharaman announced in the Budget 2023-24 to remove tax deduction from TDS on interest payments on listed debentures available under Section 193 of the Income Tax Act.

Under the provisions of Section 193, exemption from TDS in respect of payment of interest on certain securities. On the other hand, the TDS rate has been reduced from 30 percent to 20 percent in non-PAN cases on EPF withdrawals. It will come into effect from April 1, 2023.

Amendment of Section 155…

The Income Tax Department has made major amendments to Section 155 to address issues arising in deduction of TDS at source. Taxpayers have the option of paying tax before deducting TDS while declaring income under accrual method. This causes problems with TDS. Taxpayers cannot claim TDS credit.

The amendment to Section 155 allows taxpayers to apply to the Assessing Officer within two years from the financial year in which the tax was deducted. By this the Assessing Officer amends the assessment to get TDS credit. Section 244A has also been amended. It can earn interest from the date of application till the date of refund. These new changes will come into effect from April 1.

New rules for life insurance policies..

Many employees take out life insurance policies for tax deductions. However, there will be major changes in these from the next financial year onwards. For policies taken after April 1, 2023, if the annual premium exceeds Rs 5 lakh, the tax exemption will not be available. Tax deductions are available only for insurance policies with an income of less than Rs.5 lakh.

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To this extent, Union Finance Minister Nirmala Sitharaman made an announcement on life insurance policies in Budget 2023. Insurers are concerned about regulation of insurance policies. There are also concerns that the business of insurance companies will be affected. However, it remains to be seen how this new rule, which will come into effect from April 1, will change the insurance industry.