Income Tax News: Beginning on April 1, 2020 (FY 2020–21), the Centre offered the New Tax Regime under Section 115BAC as an optional replacement for the Old Tax Regime for individuals and the Hindu undivided family (HUF). However, following a three-year period, Union Finance Minister Nirmala Sitharaman declared in the Union Budget 2023 that taxpayers who do not select their preferred tax regime at the start of the fiscal year will default to the New Tax Regime.
About Standard Deduction
The Standard Deduction of Rs 50,000 for salary income, which was previously exclusive to the Old Tax Regime, has been extended to the New Tax Regime. After applying the standard deduction and tax rebate, you can earn a tax-free income of Rs 7.5 lakhs under the new tax regime.
The New Tax Regime Overview
The New Tax Regime was put into effect with the addition of concessional tax rates and adjusted tax slabs. It applies to all taxpayers, including individuals, Hindu Undivided Families (HUFs), and Association of Persons (AOPs). Budget 2023 reduced the number of income tax brackets from seven to six in an effort to streamline personal income tax laws.
Exclusions Under the New Tax Regime
The government states unequivocally that those choosing the New Tax Regime will not be qualified for several exemptions and deductions, including HRA, LTA, 80C, 80D, and others, which are exclusive to the Old Tax Regime.
Disclaimer: This information is intended for general knowledge only. Any financial decisions should be made in consultation with a qualified professional. DNP News Network Private Limited is not liable for any financial losses incurred based on the information provided here.
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