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Personal Income Tax (For Individual, HUF, AOP (other than co-operative) BOI and AJP

Currently Tax will be nil up to Income ₹  5 lakh in both regime (old and new), in proposed scheme this limit increase up to ₹ 7 lakh in the new tax regime. It means that in old regime limit of ₹ 5 lakh will be continue, there will be no benefit of Increased limit i.e. ₹ 7 lakh.

Currently in new Tax Regime personal income tax with six income slabs starting from ₹ 2.5 lakh, which will propose to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to ₹ 3 lakh. The new tax rates are:

₹ 0-3 lakh Nil
₹ 3-6 lakh 5 per cent
₹ 6-9 lakh 10 per cent
₹ 9-12 lakh 15 per cent
₹ 12-15 lakh 20 per cent
₹ Above ` 15 lakh 30 per cent

This will provide major relief to all tax payers in the new regime. An individual with an annual income of ` 9 lakh will be required to pay only ₹ 45,000/-. This is only 5 per cent of his or her income. It is a reduction of 25 per cent on what he or she is required to pay now, ie, ₹ 60,000/-. Similarly, an individual with an income of ` 15 lakh would be required to pay only ₹1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of ₹ 1,87,500/.

Standard deduction of ₹ 50,000 to salaried individual, and deduction from family pension up to ₹ 15,000, is currently allowed only under the old regime. It is proposed to allow these two deductions under the new regime also.

Reduction in Surcharge

Before Budget 2023-24 (Both for old and new regime) After Budget 2023-24 (only for new regime)
Income up to ₹50 lakh – Nil Income up to ₹50 lakh – Nil
Income above ₹50 lakh – ₹ 1cr – 10% Income above ₹50 lakh – ₹ 1cr  – 10%
Income above ₹1cr – ₹ 2cr – 15% Income above ₹1cr – ₹ 2cr  – 15%
Income above ₹2cr – ₹ 5cr – 25% Income above ₹2cr  – 25%
Income above ₹ 5cr – 37%

This would reduce the maximum rate from about 42.7 per cent to about 39 per cent. No change in surcharge is proposed for those who opt to be under the old regime.

Exemption limit for leave encashment will increase from ₹ 3lakh to ₹ 25lakh.

♦ Presumptive Taxation Income

Increase limit for Presumptive Taxation Income from ₹ 2cr to ₹ 3cr for eligible business and for specified professions from ₹ 50 lakh to ₹75 lakh. The increased limit will apply only in

Enterprises Development Act.

Limit for Carrying forward and setting off of losses will extend to 10 years from 7 years from incorporation date of such start-ups.

Extension of date of incorporation for eligible start up for exemption extended from 01.04.2023 to 04.042024.

♦ Other proposed amendment

The conversion of physical gold to Electronic Gold Receipt and vice versa is proposed not to be treated as a transfer and not to attract any capital gains. This would promote investments in electronic equivalent of gold.

In order to promote the growth of manufacturing in co-operative sector, a new co-operative society formed on or after 01.04.2023, which commences manufacturing or production by 31.03.2024 and do not avail of any specified incentive or deduction, is proposed to be allowed an option to pay tax at a concessional rate of 15 per cent similar to what is available to new manufacturing companies.

Tax on capital gains can be avoided by investing proceeds of such gains in residential property. This is proposed to be capped at ₹10cr.

Author Bio

CA Mahejabin Garashiya from Vadodra in Practice. Firm Name M S Garashiya & Comapny providing service in area of Direct Tax, Indirect Tax. View Full Profile

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May 2024