There isn’t much time left for the financial year 2023-24 to end. The new financial year will start on April 1st.
This day is crucial because many changes related to personal finance take effect on this day. Also, most of the announcements made in the budget also become effective from this day.
This time, there are some important changes happening from April 1st. Let’s learn more about them.
New tax regime will be default
If you haven’t decided between the old tax system and the new tax system yet, then choose the tax filing method that suits you best.
If you don’t choose either method by March 31st, you will be automatically switched to the new tax system.
Under the new tax system, you won’t have to pay any tax on income up to Rs 7 lakh.
However, if you want to save tax through investments, the old tax system might be more suitable for you.
Standard deduction now in new tax regime
In the past, a standard deduction of Rs 50 thousand was applicable in the old tax system.
Now, it has been incorporated into the new tax system as well. With the standard deduction, you can get tax exemption on Rs 50 thousand, which means you can deduct Rs 50 thousand from your salary without any worries.
This decreases your taxable income. Some individuals benefit so much from this exemption that they don’t have to pay any tax, thanks to the rebate under Section 87A of the Income Tax Act.
Individuals with a total income of less than Rs 5 lakh receive an exemption under Section 87A of up to Rs 12,500.
Private employed people get tax benefits here
If you work in a private company and take fewer leaves, you will receive more tax exemption on the money you get instead of taking leave.
Previously, if a non-government employee received money from the company for unused leave, only the amount up to Rs 3 lakh was tax-free. However, this limit has now been raised to Rs 25 lakh.
Those earning more than Rs 5 crore will save more tax
Starting April 1, individuals with an annual income exceeding Rs 5 crore will receive significant benefits.
The government has lowered the surcharge on income above Rs 5 crore by 12 percent.
Previously, it was 37 percent, but it will now be reduced to 25 percent from April 1.
However, this benefit will be applicable only to those who opt for the new tax system.
Tax on maturity income of insurance policy also
Now, tax must be paid on the money you receive when your life insurance policy matures. This change was announced by Finance Minister Nirmala Sitharaman.
Any policies issued on or after April 1, 2023, will be subject to this rule. However, this tax will only apply to individuals whose total premium is more than Rs 5 lakh.
