Income Tax: New tax rules applicable from April 1 - Check new tax slab, Reduction in TDS

Income Tax: Union Finance Minister Nirmala Sitharman announced in the Union Budget 2023 that the new income tax regime will become the default for all taxpayers beginning from April 1, 2023. Not just that, the FM announced a slew of changes in this year's budget speech fulfilling a longstanding demand of taxpayers, particularly the salaried class. Among the major changes announced were the increase in the tax rebate limit, changes in income tax slabs, raising the standard deduction limit for senior citizens, higher capital gain taxes under Section 24 of the Income Tax Act and a few more provisions related to winnings from online games, TDS, conversion of Gold to Electronic Gold Receipt.

Sitharaman's move to make the new income tax regime default doesn't mean the old income tax regime will be phased out. It simply means a taxpayer will have to opt for the old regime from the default new tax regime.

Let's discuss these 6 major income tax rule changes in detail:

Income Tax: Tax rebate limit raised  

Under the new tax regime, the rebate income is increased from Rs 5 lakh to Rs 7 lakh.

Income Tax: Changes in income tax slabs

FM Sitharaman has introduced new changes in the tax slab.  

New tax rates:

0-3 lakh - nil
3-6 lakh - 5%
6-9 lakh- 10%
9-12 lakh - 15%
12-15 lakh - 20%
above 15 lakh- 30%

Income Tax: Standard deduction for senior citizens

Under the new regime, senior citizens will have a standard deduction of Rs 50,000 for pensioners as well including family pensioners. Each salaried person with an income of Rs 15.5 lakh or more will benefit by Rs 52,500. 

Income Tax: Higher capital gain taxes under Section 24      

Under Income Tax Act Section 24, homeowners can claim a deduction of Rs 2 lakh on the home interest if the family reside. The cost of acquisition and the cost of improvement shall not include the amount of interest claimed under Section 24. So, the capital gain on the sale of the property will be higher and double deductions claimed by the taxpayer will be eliminated.

Income Tax: Tax on net winnings from online games

30 per cent tax will be deducted from winnings online games. The amount will be deducted at source from the winnings.

Income Tax: Reduction in TDS  

Taxpayers who have opted for the new tax income regime will see no TDS deduction due to an additional rebate provided under section 87A of the Income-Tax Act,1961 (ITA).

Income Tax: Conversion of Gold to Electronic Gold Receipt 

Physical gold conversion into EGR and vice versa by a SEBI-registered Vault Manager will be done free of any capital gain tax.