The Union Finance Minister Nirmala Sitharaman announced a few new tax rules in the Union Budget 2023. These new rules will impact tax planning schemes that you must be aware of as investors and taxpayers.
The new tax rules will become a default regime but you will still have the option to choose between the old and new one at the time of investment declaration.
Rule 2: Tax Rebate Limit Increased from Rs5 lakhs to Rs7 Lakh
The tax rebate limit has been raised from Rs5 lakhs to Rs7 lakhs. So, if your annual income is less than Rs7 lakhs, you don’t have to pay any tax or TDS on it!
Rule 3: Tax on Life Insurance Policies
If your annual insurance premium exceeds Rs5 lakhs, then the maturity amount will be taxable. However, the ULIP policy is an exception to this rule.
Rule 4: Higher Tax on Debt Mutual Funds
Debt mutual funds have been popular tax-saving investments. Unfortunately, the new rule has disappointed investors. With effect from April 1, debt mutual funds will be treated as a short-term capital gain. You will have to pay tax as per the slab rate even if you hold them for more than three years.
Rule 5: Tax on House Property Tax Sale
According to the former rule, you were eligible to receive a tax incentive under Sections 54 and 54F if you invested the sale amount from the house or other capital assets in a new house. The new rule states that any gain above Rs10 crores will be subject to 20% taxation with indexation benefit.
Rule 6: Senior Citizens Savings Scheme (SCSS) and Monthly Income Scheme (MIS)
SCSS and MIS are the two most preferred income tax-saving options among elderly people. The former investment limit in SCSS was Rs15 lakhs. However, senior citizens can now rejoice because this limit has increased to Rs30 lakhs. Similarly, senior citizens can now deposit Rs9 lakhs instead of Rs4.5 lakhs in MIS for single accounts and Rs15 lakhs instead of Rs7.5 lakhs for joint accounts.
Rule 7: Standard Deduction
The standard deduction of Rs50,000 under the old regime has been carried forward to the new regime.
How to Save Tax Apart from 80C and Home Loan
Fortunately, no changes have been made in Section 80C and home loan tax rules. However, if you are looking for other tax-saving options, here are a few:
Section 80D: Health insurance premium
Section 80CCD: National Pension Scheme
Section 80CCC: Pension Plans
Section 80G: Donation to charity
Section 80E: Repayment of education loan
It is advisable to do your investment and tax planning in April itself. This will give your money an entire financial year to earn better returns and save more tax. Ajmera x-change can assist you to manage your money most effectively through trustworthy and personalized investment advisory
Contact us to know more.