Union Finance Minister Nirmala Sitharaman presented the 2023-24 Budget on February 1st. The Budget had many features such as important changes to the fiscal policies, investments on infrastructure, capex spending, boosting the green economy and so on. The government intends to reduce the fiscal deficit from 6.4% in FY23 to a targeted 5.9% in FY24. The budget provided some ease to middle-class taxpayers under the new tax regime, which featured significant changes. Additional cash of ₹35,000 crore has been put in the hands of the Indian taxpayers through this measure. Here’s a short summary of important tax and other finance details under the new budget:
New Tax Slabs
There are no changes in the old tax regime. The new tax regime shall be the default tax slab classification, but citizens can opt for the old tax regime as well. New income tax slabs have been introduced under the new tax regime and it is as follows: Rs 0-3 lakh: No taxes applicable Rs 3-6 lakhs: 5% Rs 6-9 lakhs: 10% Rs 9-12 lakhs: 15% Rs 12-15 lakhs: 20% Rs Over 15 lakhs: 30%
- With the inclusion of standard deduction, citizens earning up to 7 lakh will not pay any taxes whatsoever.
- Also, the surcharge rate of the higher income tax slab will reduce from 37% to 25% in the new tax regime.
- The standard deduction of Rs. 50,000 for salaried individuals was previously available for those individuals who opted for the old tax regime, but now it is also available in the new tax regime.
- For business establishments required to have Permanent Account Number (PAN), it will be used as a common identifier for all digital systems of specified government agencies.
Seniors and Women
- The deposit limit for Senior Citizen Saving Scheme (SCSS) has been increased from Rs. 15 Lakh to Rs. 30 Lakh. Also, the Post Office Monthly Income Scheme (POMIS) individual account limit has been raised from 4.5 Lakh to Rs. 9 Lakh. For a joint account, the limit has been increased from Rs. 9 Lakh to Rs. 15 Lakh. This means that the interest earned from both these saving schemes will be doubled henceforth.
- A new one-time scheme has been launched for 2 years (till March 2025) namely, the Mahila Samman Savings Certificate with a deposit of up to Rs. 2 Lakh and an interest rate of 7.5%. This scheme is available for partial withdrawal.
Life Insurance Policies Taxable
Currently, the maturity proceeds for all life insurance policies are tax free if:
- (For policies issued after 1 April 2012) the premium does not exceed 10% of the sum assured for policies.
- (For policies issued between April 1 2003 and 31 March 2012) the premium does not exceed 20% of the sum assured for policies.
However, for all life insurance plans issued on or after April 2023, the tax exemption on maturity benefits under Section 10(10D) will only be applicable if the aggregate premium is up to Rs. 5 Lakh. This will not affect:
- the policies issued till 31 March 2023.
- the exemption of the amount received on the death of the insured person.