Budget Highlights – 2023 ! Highlights and Old regime Versus New regime !!!
7 key changes in Budget impacting ‘Investors’ –
1) New Life Insurance policies > 5 lacs aggregate premium – Proceeds are now taxable (For ULIPs this was already at 2.5 lacs )
Impact – Traditional Insurance becomes unfavourable from 1st April. Rush to buy?
2) REITs / InvITs – Change in taxation for Repayment of debt. Now even this component in distribution is taxable For e.g.: some REITs give income as a large part as this. So that is a negative
Impact – REIT prices should fall a bit.
3) Market Linked Debentures (MLDs) / Structured Products will now be fully taxed as short-term capital gains. Earlier taxation on this was 10% and treated as Long term gains This was called out by Nilesh Shah rightly pre-budget Impact: This anomaly is now dead.
Impact – MLDs will also die.
4) Finance Minister is clearly pushing for everyone to shift to New tax regime i.e. no deductions Sec 80 C benefits like ELSS, PPF, NPS etc will not be available if you shift to New Tax Regime Impact – More money in hands of investors, but lesser savings. You take a call.
New Slabs in new Regime
New tax rates:
0 to Rs 3 lakhs – Nil
Rs 3 to 6 lakhs – 5%
Rs 6 to 9 Lakhs – 10%
Rs 9 to 12 Lakhs – 15%
Rs 12 to 15 Lakhs – 20%
Above 15 Lakhs – 30%
No income tax will be charged till Rs 7 lakh in new tax regime.
Sec 80 C benefits like ELSS, PPF, NPS etc will not be available once u shift to New Tax Regime
Impact – More money in hands of investors, but lesser savings.
Remember Old regime is still Better if you have HRA (paying Rent) or Home Loan 2L+ 80C 1.5L + Medical 25K+ (overall deductions > 4.25L)
Another negative one for very ultra-HNIs
5) Another negative one for very ultra-HNIs: Capital Gains > 10 Cr will not get benefit of Sec 54F This means if you sell a house / stake in a company, and gains are more 10 Cr (I know this is not for all of us) then max benefit is till 10 Cr when you invest in another property etc
6) Winnings from Online Gaming had TDS but many used to circumvent it. Now this is plugged. So if you are into Online Gaming (which ideally no one should be in, but many like this gambling), you can be sure the IT man is watching you more closely now
7) International Investing: If you have been investing abroad through LRS (Liberalised Remittance), the TDS is now increased to 20%. This will be a big impact Earlier TDS was only 5% and that too if > 7 lacs. Now it is flat 20% Impact – Negative for global investing
“Which tax regime is better – old or new?”
In new regime there are basically no deductions / no 80C / no loan interest / no NPS / PPF / EPF etc etc
“Which tax regime is better – old or new?”
If you are claiming any tax deduction or exemption amounting to Rs. 4,25,000 or more, the old tax regime is more beneficial. For individuals with income less than Rs. 15.5 lakh, this number can be lower.
And in all other cases the new regime is more beneficial.
If you are claiming any tax deduction or exemption amounting to Rs. 4,25,000 or more, the old tax regime is more beneficial. For individuals with income less than Rs. 15.5 lakh, this number can be lower.
And in all other cases the new regime is more beneficial.
There is no enhancements in old tax regime
New tax regime enhancements in this budget
[1] No income tax on income up to Rs. 7 lakh in the new tax regime
[2] For income above Rs. 7 lakh –
– Number of income tax slabs reduced to 5
– Tax exemption limit increased to Rs. 3 lakh
[3] Standard deduction of Rs. 50,000 has been introduced which was only in the old regime before. So, if you have transitioned to the new regime, compared to last year you will save an additional Rs. 52,500 per year.
[4] For those whose income exceeds Rs. 5 crore, surcharge has been reduced from 37% to 25% under the new tax regime.
Tax Team Enrichwise
