New tax regime

Last updated on May 11th, 2023 The Finance Minister, Nirmala Sitharaman in the Budget 2020 introduced a new tax regime u/s 115BAC of Even after lower slab rates, majority of the taxpayers were filing ITR under the old tax regime. Hence, to make compliance easier and make it attractive for the taxpayers to opt for the new regime, the Finance Minister in Budget 2023 revised the tax slabs and rates under the new regime and announced it as the default tax regime for the taxpayers from FY 2023-24 onwards. • • • • • • • • New Tax Slab Rates u/s 115BAC as per Budget 2023 The below table shows the new income FY 2023-24/AY 2024-25 onwards: Tax Slab Tax Rate Up to INR 3,00,000 Nil INR 3,00,001 – 6,00,000 5% INR 6,00,001 – 9,00,000 10% INR 9,00,001 – 12,00,000 15% INR 12,00,001 – 15,00,000 20% Above INR 15,00,000 30% Other Modifications in the New Regime as per Budget 2023 • The new regime will be the default tax regime. However, taxpayers can still opt for and file ITR under the old tax regime. • Previously taxpayers had the option to opt for the New regime only up to the due date of ITR filing as per section 139(1), post that all returns were processed by default under the old tax regime which will now be processed under the new tax regime by default. • The • The introduction of the standard deduction of INR 50,000 for Salaried individuals, pensioners, and family pensioners. • The highest rate of surcharge on income above INR 5 crore has been reduced to 25% from 37%. As a result, m...

Finance Minister Nirmala Sitharaman made five major announcements on personal income tax to benefit the “hard-working” middle class. She also said that while the new tax regime would be the default, tax payers could opt for the old one. Sitharaman proposed to raise the rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime. Therefore, if an individual has opted for the new tax regime, he or she will not be required to pay any tax up to an annual income of Rs 7 lakh. She also announced changes to tax slabs in the Also Read | The new income tax slabs under the new tax regime are Rs 0-3 lakh: Nil Rs 3-6 lakh: 5 per cent Rs 6-9 lakh: 10 per cent Rs 9-12 lakh: 15 per cent Rs 12-15 lakh: 20 per cent Over Rs 15 lakh: 30 per cent The move is aimed at incentivising people to shift to the new tax regime, which has not seen much traction since launch in FY21. What is the new tax regime? The lower tax regime for individuals However, this regime has not seen many takers so far, as it is considered more complicated. “For every tax assessee, it has 7, 8, 9, 10 exemptions. And with all that exemptions, the rate 10, 20, 30 per cent continues. It continues even today. We have not removed it. What we have done in the name of simplicity and to avoid harassment… removing harassment was what was aimed at when we brought in faceless tax assessment,” she said. The various tax slabs. “In order to keep the simplicity and not deny those who want to keep the old simplicity, we kept that intac...

Income Tax Standard Deduction: The standard deduction is available to salaried individuals and pensioners. The standard deduction is a fixed amount that is allowed as a deduction from an individual’s taxable income. It helps in reducing the taxable income of individuals and provides relief from tax liability. In India, the standard deduction was introduced in 1974, which was later discontinued. The Union Budget 2018 re-introduced it and currently it is available to salaried individuals and pensioners. Also Read: Standard Deduction Benefits This deduction reduces the taxable income of the individual and therefore reduces their tax liability. The standard deduction was applicable only to individuals who opt for the old tax regime, however, from the current financial year (FY 2023-24) the benefits are extended to the individuals who opt for the new tax regime as well, which was introduced in 2020. Income Tax Standard Deduction FY 2023-24 For the financial year 2023-2024, the standard deduction for salaried individuals is Rs 50,000. This is a flat deduction that can be claimed irrespective of the actual expenses incurred on transport allowance and medical allowance. The standard deduction is available to all salaried individuals, including those who are employed by government, private companies, or non-profit organisations. The standard deduction is a tax benefit that can help to reduce your taxable income. For example, if you have a taxable income of Rs 100,000 and you claim ...

New Tax Regime Calculator 2023-24 (Online): Finance Minister Nirmala Sitharaman proposed to reduce the number of tax slabs under the clutter-free New Tax Regime from six to five. The revised tax slabs under the new regime will be applicable for Assessment Year (AY) 2024-25 or for the income made in FY 2023-24. For income in FY 2022-23 (AY 2023-24), you will have to file Income Tax Return as per the old tax slabs. As per the latest tax slabs under the New Regime, individuals having an annual income of Rs 5-6 lakh will have to pay 5% tax while those earning Rs 6-9 lakh will have to pay 10% of their income as tax. Further, individuals earning Rs 9-12 lakh per year will pay 15% tax while those earning Rs 12-15 lakh annually will pay 20% tax. The tax rate for individuals earning more than Rs 15 lakh will pay 30% tax. Can you change tax regime while filing Income Tax Return (ITR)? Interestingly, the Finance Minister has made annual income up to Rs 7 lakh tax-free by increasing the rebate limit. But what about those earning Rs 7.5 lakh or Rs 8.5 lakh per year? You can calculate your tax liability in the New Tax Regime Calculator FY 2023-24 (AY 2024-25) The following chart prepared by Dr Suresh Surana, Founder of RSM India, will also help: Individual Tax on Income under New Tax Regime for FY 2023-24 (AY 2024-25) Income Level Basic Surcharge Cess Tax Liability 2,50,000 3,00,000 5,00,000 6,00,000 – – – 7,00,000 – – – – 7,50,000 30,000 – 1,200 31,200 9,00,000 45,000 – 1,800 46,800 10...

2022 tax brackets and federal income tax rates Tax Rate Single filers Married filing jointly or qualifying surviving spouse Married filing separately Head of household 10% $0 to $10,275 $0 to $20,550 $0 to $10,275 $0 to $14,650 12% $10,276 to $41,775 $20,551 to $83,550 $10,276 to $41,775 $14,651 to $55,900 22% $41,776 to $89,075 $83,551 to $178,150 $41,776 to $89,075 $55,901 to $89,050 24% $89,076 to $170,050 $178,151 to $340,100 $89,076 to $170,050 $89,051 to $170,050 32% $170,051 to $215,950 $340,101 to $431,900 $170,051 to $215,950 $170,051 to $215,950 35% $215,951 to $539,900 $431,901 to $647,850 $215,951 to $323,925 $215,951 to $539,900 37% $539,901 or more $647,851 or more $323,926 or more $539,901 or more TurboTax Online: Important Details about Free Filing for Simple Tax Returns If you have a simple tax return, you can file for free yourself with TurboTax Free Edition, or you can file with TurboTax Live Assisted Basic or TurboTax Live Full Service Basic at the listed price. A simple tax return is one that's filed using IRS Form 1040 only, without having to attach any forms or schedules. Only certain taxpayers are eligible. Situations covered (assuming no added tax complexity): • W-2 income • Interest or dividends (1099-INT/1099-DIV) that don’t require filing a Schedule B • IRS standard deduction • Earned Income Tax Credit (EIC) • Child Tax Credit (CTC) • Student loan interest deduction Situations not covered: • Itemized deductions • Unemployment income reported on ...

Note – This blog has been updated based on Budget 2023 announcements. You can understand how the latest changes will impact your tax calculation in Financial Year 2023-24 and Assessment Year 2024-25. The Budget 2023 saw Finance Minister Nirmala Sitharaman announce multiple changes in the New Tax Regime. But she surprised everyone by making the New Tax Regime the default regime. For salaried, it means your organisation will deduct your taxes based on the new regime. If you want to continue in the Old Regime, you will need to request your employer to do so. The New Regime was first launched in the Budget 2020. Since then, it has evolved to be more attractive. The government brought the New Regime to simplify taxes. For many, it’s cumbersome to claim deductions and exemptions and maintain records. With the New Tax Regime, the government wants to ease all this compliance burden. You don’t have to worry about deductions, make tax-saving investments and think of ways to optimise your salary to lower your tax outgo. If you want your tax planning to be straightforward, New Regime will be the right choice. But if you are among those who are fine with the compliances as long as you get to save the maximum tax, you will need to thoroughly compare the two and then decide. Here’s a detailed comparison that can help you take a call on whether you should opt for the New Tax Regime or the Old one. New Tax Regime Has More Slabs, Lower Tax Rate The new tax regime is different from the old t...

Expats benefitting from the new special tax regimes for inbound taxpayers and researchers in Belgium are granted an extended tax return filing deadline. The new tax regime for inbound taxpayers and researchers came into effect at the beginning of 2022. Expatriates who opted-in or applied for this new regime last year are now approaching the first tax return filing deadline in Belgium. Due to the change in their tax residency status, the tax-on-web portal of the tax authorities often displays an incorrect tax status. Consequently, the Minister of Finance has announced an exception to the resident filing deadline. Background The ‘old’ Belgian special tax concessions, governed by a circular letter dated 8 August 1983, was a beneficial yet rather complex taxation regime for individuals who were hired abroad or transferred to Belgium by their employer. Upon fulfilling multiple conditions, these expatriates were considered as Belgian non-resident tax payers. As this former expatriate tax regime often created challenges and complexities from a international tax and residency point of view, the legislator created two new systems with focus on transparency and simplicity: the tax regime for inbound taxpayers and the regime for inbound researchers. Both regimes entered into force as from the 1 st of January 2022. More information regarding the basic rules, conditions and benefits can be found in our previous alert ( Expats who benefitted from this old regime for a period of less tha...