Income Tax India 2023-24 New Changes and Impact on Payroll, Compensation Management
Let us have a look at the recent Income Tax changes in India and it's impact on Compensation, Benefits and Payroll Management.
Thu Feb 2, 2023
Income Tax 2023-24 in India
We shall explore more about Income Tax changes as per recently announced Budget 2023-2024 in India:-
With the recent announcement of Budget 2023 in India, we can observe few major changes in Income Tax Slab. Also a few other changes affecting Compensation and Payroll process in India.
Here are the highlights:
New Income Tax Slab for the Financial Year 2023-24 : -
What are the benefits of new tax regime?
Under the new tax regime, salary income upto 7 lakhs will not be taxable. Which means 0 tax. But if your income exceeds Rs. 7 lakhs per year, you need to pay income tax right from your income starting Rs. 3 lakhs.
New tax regime and Old Tax regime?
Yes, both the options are available for the tax payers.
Which is better: Old or new Tax Regime?
It depends on the income you have and also the savings/investments that you have. Hence, it is advised to do a calculation using both regimes to find out which one gives you max tax savings. If you do not have any investments / savings, New Tax Regime might be the better option.
Which is the default tax regime incase if an employee / individual has not made any selection?
What is the minimum salary to file ITR?
If you earn 2,50,000 per year or more, you need to file ITR compulsarily every year, even if your tax is 0.
Maximum tax, alongwith Surcharge will be now 39%
“The highest tax rate which in our country is 42.74 per cent. This is among the highest in the world. I propose to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. This would result in reduction of the maximum tax rate to 39 per cent," announced FM while presenting Budget 2023."Tax rates have been reduced under the new tax regime and the maximum marginal rate drops from 42.74% to 39%," said Saraswathi Kasturirangan, Partner, Deloitte India.
Leave Encashment: Income Tax Exemption limit
The limit of ₹3 lakh for Income tax exemption on leave encashment on retirement/resignation of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was ₹30,000 pm. In line with the increase in government salaries, new budget is proposing to increase this limit to ₹25 lakh. This is a welcome change. Take a quick look at the New Income Tax Calculator 2023-24
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