On February 1, 2023, The Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman announced the Union Budget 2023-24. It is the fifth budget of Hon. PM Modi’s second term as the country’s prime minister. Let’s look at some of the budget’s direct tax highlights, overview what it aims to include and its seven priorities.
Direct Tax Highlights
New Tax Regime Changes
The new tax regime is the default one. The government has taken various measures to make the new tax regime more attractive. But taxpayers may opt for the old tax regime.
FY 2023-24 (AY 2024-25) – Changes in the Slabs of the New Tax Regime
| Range of Income | Income Tax Rate |
|---|---|
| Up to Rs. 3,00,000Rs. 3,00,000 to Rs. 6,00,000Rs. 6,00,000 to Rs. 9,00,000
Rs. 9,00,000 to Rs. 12,00,000 Rs. 12,00,000 to Rs. 15,00,000 Above Rs. 15,00,000 |
Nil5% on income which exceeds Rs 3,00,000Rs 15,000 + 10% on income more than Rs. 6,00,000
Rs 45,000 + 15% on income more than Rs. 9,00,000 Rs 90,000 + 20% on income more than Rs. 12,00,000 Rs 1,50,000 + 30% on income more than Rs 15,00,000 |
- The new budget has introduced a rebate on income of Rs. 7 lakhs. So, you don’t have to pay tax if your taxable income is below 7 lakhs under the new regime.
- The standard deduction of Rs 50,000 has been introduced under the new regime.
- The highest surcharge under the new regime is reduced to 25% from 37% for people who earn more than Rs. 5 crores. Thus, the tax rate has been brought down from 42.74% to 39%.
Presumptive Taxation Limits Revised for FY 2023-24
| Category | Previous Limit | Revised Limit |
|---|---|---|
| Sec 44AD: For small businessesSec 44ADA: For professionals like doctors, lawyers, engineers, etc. | Rs. 2 croresRs. 50 lakhs | Rs. 3 croresRs. 75 lakhs |
The limits may be increased if 95% of the receipts are through online channels.
Startups
| Startups | Previous Limit | Revised Limit |
|---|---|---|
| Incorporation date for income tax benefitsTime limit for set-off and carry forward of losses | 31.03.20237 years from incorporation | 31.03.202410 years form incorporation |
Here, the only condition is that shareholders with a minimum of 51 percent of shareholding should continue to hold shares in the year such loss is to be set-off and carried forward. Let’s now look at some objectives of Budget 2023.
Objectives of Budget 2023
- Providing abundant opportunities to citizens, especially the youth
- Providing momentum to growth and employment creation
- Augmenting macro-economic stability
- Women empowerment
- To help women self-help groups to graduate to the next stage of economic empowerment
- To provide self-help groups with raw material supply, product marketing and branding
Saptarishi: Budget 2023 7 Priorities
- Inclusive Development
- Reaching the last mile
- Infrastructure and investment
- Unleashing the potential
- Green growth
- Youth power
- Financial sector
So, these are some of the direct tax-related budget highlights. Connect with a qualified chartered accountant to understand the meaning of a particular Budget 2023 highlight.