Budget 2023 Highlights: Direct Tax

  1. Change in new tax regime slabs for Financial Year 2023-24 
Income rangeIncome tax rate
Up to Rs. 3,00,000Nil
Rs. 300,000 to Rs. 6,00,0005% on income which exceeds Rs 3,00,000 
Rs. 6,00,000 to Rs. 900,000Rs 15,000 + 10% on income more than Rs 6,00,000
Rs. 9,00,000 to Rs. 12,00,000Rs 45,000 + 15% on income more than Rs 9,00,000
Rs. 12,00,000 to Rs. 1500,000Rs 90,000 + 20% on income more than Rs 12,00,000
Above Rs. 15,00,000Rs 150,000 + 30% on income more than Rs 15,00,000

2) Under the new tax regime, there is a tax rebate on income below Rs 7 lakhs. This means you do not have to pay tax if your taxable income falls below Rs 7 lakhs.

3) The standard deduction of Rs 50,000 has been introduced under the new tax regime as well.

4) For people earning more than Rs 5 crore, the highest surcharge under the new tax regime has been reduced to 25% from 37%, bringing their tax rate down from 42.74% to 39%.

5) Presumptive Taxation Limits under section 44AD for Small Business revised from 2 Crore to 3 Crore and under Sec 44ADA for Professional like Doctors, engineers etc from 50 Lakh to 75 Lakh subject to a condition that the 95% of the receipts must be through online channels.

6) A concessional tax rate of 15% has been extended to new co-operatives that begin manufacturing by 31st March, 2024.

7) By making an application to the Assessing Officer, sugar co-operatives can now claim expenditures that were disallowed before 2016-17.

8) TDS limit on cash withdrawals is increased to Rs. 3 crores for co-operatives societies.

9) A maximum of 200,000 has been set for cash deposits and loans by Primary Agricultural Co-operative Societies (PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs)

10) Under Section 10(10AA), leave encashment of up to Rs. 25 lakhs for a maximum period of 10 months is tax-free at the time of retirement for non-government employees. The earlier threshold was 3 lakh.

11) TDS rate has been reduced to 20% from 30% on taxable withdrawal of EPF

12) Payments to MSME shall only be allowed as expenditure when they are made. This move brings payments to MSME under the purview of Section 43B.

13) Penalty Section 269SS or 269ST do not apply to loans accepted or repaid by primary agricultural credit societies or primary co-operative agricultural and rural development banks.

14) The capital gains tax exemption under Section 54 to 54F is restricted to Rs. 10 crores. Earlier, there was no threshold.

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