Applicable for FY 2023-24

Change in Tax Slab under New Regime for Individuals and HUF

The New regime tax slab has been revised from ₹ 2,50,000 to ₹ 3,00,000. The revised tax slabs applicable from FY 2023-24 ie AY 2024-25 are:

• An important update about opting for the new regime is that from AY 2024-25, the default will be the new regime and an assessee has to now opt for the old regime while filing ITR.

Standard Deduction for Salary Income under New Regime

1. From FY 2023-24, the Standard Deduction of ₹ 50,000 under Salary income head was made allowable to those opting for the new regime. This benefit was earlier available only to the old regime. A detailed analysis has been done here.
2. Section 57(iia) deduction for family pension received and taxable under income from other sources has also been made allowable under the new regime. An amount equal to lower of-

• 1/3rd of pension, or
• ₹ 15,000 is allowable as a deduction.

Section 87A Tax Rebate

Under the new regime, a rebate of maximum ₹ 25,000 shall be allowable if taxable income does not exceed ₹ 7,00,000. The rebate under the old tax regime remains ₹ 12,500 maximum if taxable income does not exceed ₹ 5,00,000.

Change in Surcharge

Under the Income Tax Act when income exceeds a certain threshold, an additional tax is charged termed as Surcharge. This is an additional tax payment on higher income persons.

From 1st April 2023, the higher surcharge rate of 37% when an individual’s income exceeds ₹ 5 crore under the new regime was reduced to 25%.

Applicable Surcharge rates for individuals under the new regime in AY 2024-25 are:

Under the old regime, there is another slab of 37% surcharge if income exceeds ₹ 5 crore.

Change in Section 10(10D) exemption on Life Insurance Policies

From FY 2023-24, any LIC policy with an Annual Premium exceeding ₹ 5,00,000 shall be taxable. This change does not apply to payments received on the death of the policyholder or ULIPs (Unit Linked Insurance Plan). The exemption for ULIPs remains at ₹ 2,50,000.

In both cases, total premium payments in the year on all policies should not exceed the applicable limits, to claim exemptions.

Section 80CCH and Section 10(12C) introduced

• Section 80CCH- allows the deduction of the contribution made by an individual and the central government to the Agniveer Corpus Fund upon enrollment in the Agnipath Scheme on or after 1st November 2022.
• Section 10(12C)- any amount received by the person enrolled under the scheme or their nominee shall be exempt from tax under the Income Tax Act.

Senior Citizen Savings Scheme(SCSS)

The maximum limit for investment in the Senior Citizen Savings Scheme has been increased to ₹ 30 lakhs with effect from 1st April 2023. This was previously ₹ 15 lakh. The tax benefit is available under Section 80C of the Income Tax Act.

Introduction of Section 115BAE for Cooperative Societies

Any manufacturing cooperative society set up on or after 1st April 2023, that has commenced manufacturing or production before 31st March 2024 and that has not availed specified deductions may opt for a concessional tax rate of 15% along with a surcharge of 10%. The option is to be exercised before the original return filing due date and once exercised shall apply to subsequent financial years.

Presumptive Tax

From AY 2024-25,

• Section 44AD- limit for eligible businesses has been increased to ₹ 3 crores from ₹ 2 crores.
• Section 44ADA- limit for eligible professionals has been increased to ₹ 75 lakhs from ₹ 50 lakhs.

These increased limits shall only apply if the total amount received in cash during the year does not exceed 5% of the total revenue or gross receipts.

Section 43B Payments to MSME

Deduction under 43B for any payments to Micro and Small Enterprises shall only be allowed on an actual payment basis within the deadline as under the MSMED Act and not on an accrual basis.

Section 194BA TDS on Net Winnings from Online Games

A new section under the Income Tax Act is applicable from 1st July 2023 for TDS to be done on net winnings from online games at the end of the financial year or at the time of withdrawal whichever is earlier. The rate of TDS is presently 30% and is to be deducted by the person who is responsible for paying the net winnings.

Section 115BBJ Tax on Net Winnings from Online Games

The rate is to be 30% of the net winnings from online games.

Section 206C(1G) change in TCS rates on foreign remittances

• On Sale of Overseas Tour Package- 5% up to ₹ 7,00,000 and 20% TCS Rate beyond that.
• Liberalised Remittance Scheme for any payment that is not for the purpose of education loan or medical treatment- 20% TCS Rate on amounts above ₹ 7,00,000.
• No changes have been made under LRS for educational loans or medical treatment purposes.

Sections 54 and 54F

With effect from AY 2024-25, the maximum exemption under Sections 54 and 54F is ₹ 10 crores. Any investment made beyond that is restricted to 10 crores under the Income Tax Act.