Changes in Income Tax w.e.f 01.04.2023

By | March 28, 2023
(Last Updated On: March 28, 2023)

Changes in Income Tax w.e.f 01.04.2023

1) New income tax regime to be default regime

  • From 1st April 2023, the new income tax regime will act as the default tax regime.
  • Assessee  will still be able to choose old Tax  regime.
  • If the Salaried and pensioners opt new Tax regime then  standard deduction for taxable income exceeding Rs.15.5 lakhs is 52,500.

2) Income Tax rebate limit raised to 7 lakh under New Tax regime

If the resident Individual opt New Tax regime then tax rebate limit to will be 7 lakh . Thus for  the person whose income is less than 7 lakh need not invest anything to claim exemptions and the entire income would be tax-free irrespective of the quantum of investment made by such an individual.

3) Standard deduction under New Tax Regime

  • Benefit of standard deduction of Rs 50000 from Salary  will be available under  new tax regime. It will benenfits salaried and pensioner.
  • Each salaried person with an income of 15.5 lakh or more will benefit by 52,500.

4) Changes in Income Tax slabs for New Tax Regime u/s 115BAC

The new tax rates are

0-3 lakh – nil

3-6 lakh – 5%

6-9 lakh- 10%

9-12 lakh – 15%

12-15 lakh – 20%

above 15 lakh- 30%

5) Leave Encashment 

The leave encashment for non government employees is exempt up to a certain limit. This limit was 3 lakh since 2002 and is now increased to 25 lakh

6) No LTCG tax benefit on Specified Mutual Funds

  • From April 1, investments in Specified debt mutual funds will be taxed as short-term capital gains.
  • No Indexation benefit for cost will be allowed for  these specified Mutual Funds if investment made on or after 1st April 2023

7) Market Linked Debentures (MLDs)

  • from 1st April 2023 , Investment in Market Linked Debentures (MLDs)  will be short term capital assets.
  • No Indexation benefit for cost will be allowed for  these Market Linked Debentures

8) Life Insurance policies

Proceeds from life insurance premium over the annual premium of 5 lakh would be taxable from new financial year i.e. from 1st April 2023. The new income tax rule will not apply  on ULIP (Unit Linked Insurance Plan).

9) Benefits to Senior Citizens

  • The maximum deposit limit for senior citizen savings scheme will be increased to 30 lakhs from 15 lakhs.
  • The maximum deposit limit for monthly income scheme will be increased to 9 lakhs from 4.5 lakhs for single accounts and 15 lakhs from 7.5 lakhs for joint accounts.

10) Physical gold conversion to e-gold receipt not to attract capital gains tax

There will not be any capital gain tax if physical gold is converted to an Electronic Gold Receipt (EGR) and vice versa. This will be effective from 1 April 2023.

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About CA Satbir Singh

Chartered Accountant having 12+ years of Experience in Taxation , Finance and GST related matters and can be reached at Email :