The new financial year will begin tomorrow, April 1, and with the new financial year, many tax-related rules will also change. Several announcements that were made during the announcement of the budget will come into effect.
Some new rules related to tax slabs, insurance policies, and standard deductions are going to be implemented from April 1. Let's take a look at the changes that are to be implemented from April 1:
Auto-Default Tax Regime
If you have not chosen between the old tax regime and the new tax regime, then you will automatically move to the new tax regime from April 1. In the new tax system, you will not have to pay any tax on earnings up to Rs 7 lakh. But, if you want to save tax by investing, the old tax regime may be better for you.
Standard Deduction In New Tax Regime
Earlier, a standard deduction of Rs 50 thousand was applicable only in the old tax regime. Now it has been included in the new tax regime. Under standard deduction, tax exemption is available on Rs 50 thousand, which means that after standard deduction, you will not have to pay any tax on earnings up to Rs 7.5 lakh.
Some people benefit so much from this exemption that no tax is levied on them with the rebate under Section 87A of the Income Tax Act. Those with a total income of less than Rs 5 lakh get exemption up to Rs 12,500 under Section 87A.
Tax Benefits For Private Employees
If you work in the private sector and take less leave, then you are going to get more tax exemption on the money you receive in lieu of leave. Earlier, if a non-government employee took money from the company in exchange for his remaining leave, then only the amount up to Rs 3 lakh was tax-free. But, now this limit has been increased to Rs 25 lakh.
Those Earning Over Rs 5 Crore Will Save More Tax
From April 1, those with an annual income of more than Rs 5 crore will also get huge benefits. The government has reduced the surcharge on income above Rs 5 crore by 12 per cent. Earlier it was 37 percent, which will become 25 per cent from April 1. However, this benefit will be available only to those people who choose the new tax system.
Tax On Maturity Income Of Insurance Policy
Now tax will have to be paid on the maturity income received from a life insurance policy. This was announced by Finance Minister Nirmala Sitharaman. Whatever policies are issued on or after April 1, 2023, will come under the purview of this rule. However, this tax will have to be paid only by those people whose total premium is more than Rs 5 lakh.