Budget 2023 is here and it will start impacting our pockets soon. The confusion around old and new tax regimes and how pocket friendly is the budget for the ‘aam aadmi’?
Let’s know it all.
What’s cheap and What’s expensive?
Both the Gold and glitter will become costly as the basic customs duty on artificial jewellery as well as articles made of gold bars are proposed to be increased. Though, diamonds can be cheaper if you buy lab-grown ones. Smoking is not only injurious to health but also your wallet as National Calamity Contingent Duty on cigarettes has been hiked by 16%. If you love imported luxury cars then, you need to shell out extra rupee as custom duty on petrol and diesel-run vehicles in Completely Built Unit (CBU) form has been increased.
Mobile phones and TVs could become cheaper as customs duty is proposed to be reduced on imports of some of its parts. Also, buying Made in India EVs will become cheaper.
Personal Income Tax has got options!
The Budget 2023 has spurred a battle between the Old and New Tax regime. The government has made the New Tax regime default while still giving you the option to choose the old one. The government has reduced the number of tax slabs in the new tax regime making it as follows
But, don’t look at the tax rate if your income is up to 7 lakhs. You have to pay ZERO TAX. This is because of Rebate u/s 87A which exempts tax up to Rs. 25,000/- if your income is up to Rs. 7 lakhs. Though, you still need to file a return to claim this exemption.
All this is for only the new tax regime. A rosy picture indeed! But, if you are someone who maximizes 80C deduction through home loan principal repayment and maximizes 80D deduction by taking health insurance for yourself and your parents, then, any way you pay zero tax on Rs. 7 lakhs in the old tax regime.
So, choosing the tax regime has to be evaluated on case to case basis.
Your account got credited with Rs. 50,000/-!
For Salaried employees, the benefit of Standard deduction has been extended to the new tax regime as well. Now, the salaried class will get Rs. 50,000 standard deductions in both the old and new tax regimes. But, if your salary is 15.5 lakhs or more, then in the new tax regime, you can take the standard deduction of Rs. 52,500/- while in the old tax regime, it is still Rs. 50,000/-.
Freelancers and Small businesses….Good news for you!!
If you are a professional or a small business owner, then you might be aware of presumptive taxation. Small businesses have the option to choose presumptive taxation and declare only 8% of turnover as profits. It can be 6% if you receive your sale money digitally. That too no questions asked! The turnover limit to opt for this scheme was 2 crores. This has been proposed to increase to Rs. 3 crores.
Similarly, professionals such as freelancers, doctors, lawyers, etc. can pay tax on only 50% of their total receipts from clients. The Total receipts limit to opt for this scheme has been proposed to be increased from Rs. 50 Lakhs to Rs. 75 Lakhs.