New Income Tax Slab Budget 2023 Updates & Highlights: Tax rebate hiked, slabs reduced

CA Manish P. Hingar, Founder at Fintoo, says that Multi Linked Debenture (MLD) was earlier considered to be a good investment option from the tax perspective as the income arising from MLD, which has more than 12 months of the maturity period, was treated as a long-term capital gain and charge of 20% with indexation or 10% without indexation. It was a quite popular investment instrument as it attracted very minimal tax on gains.

Also Read

Income Tax Slab 2020-21: Old tax regime or new one – which is more beneficial?

Union Budget 2022 disappoints majority of taxpayers

Budget 2022 allows 2 more years to file ITR; Know the whopping cost of delay in filing

Old vs New Tax Regime: How will Budget 2023 benefit taxpayers under both regimes?

“However, Finance Minster Nirmala Sitharaman spoke in her budget that to give parity to this option, now, under the new section of 50AA of the income tax Act, 1962, with effect from 1st April 2024, the income arising from MLD is proposed to be taxed as a short term capital gain. However, it may be noted that no deduction will be allowed on account of the STT amount paid on these MLDs. With current budget proposals, Short Term Capital gain tax will be taxed @15% (if MLD is STT paid) and as per regular income tax slab if it is not STT paid. As mostly all the MLDs are without STT paid so now all the gains arising from the sale of MLDs will be added to your income and tax with higher applicable rates,” he says.

Amandeep Chopra, Head of Fixed Income, UTI AMC, says: “The Bond markets had gone into the budget with the expectation of fiscal deficit between 5.8% to 6% for FY24 and a Gross Borrowing of INR 15.5 to 16 trillion with Net borrowing between INR 11.5 to 12.5 trillion. The FY24BE on these were in line with market expectations and at the lower end of the range. A fiscal deficit of 5.9% with Gross and Net borrowings of INR 15.43 trillion and 11.80 trillion respectively was taken very positively by the markets. The bond markets reacted with the 10-Year benchmark closing 7 bps lower at 7.28%.”

Tarun Chugh, MD and CEO at Bajaj Allianz Life Insurance, says: “The new tax regime has been made more attractive by introducing standard deduction of INR 50,000 that was earlier available only under the old tax regime (for salaried individuals) and changing the income tax slabs. Further, under the new tax regime, rebate limit has been increased from INR 5L to 7L (implying that individuals with income of up to INR 7L will not have to pay personal income tax).

“The budget announced that for non-ULIP (traditional) insurance policies issued from the new fiscal year, income from only those policies with aggregate premium up to Rs 5 lakh shall be exempt. This is bit of a dampener for the insurance industry and for increasing penetration of insurance and household financial savings in India. India still has quite low insurance penetration and there is a need to provide measures and incentives to boost that in the coming years,” he adds.

Ravi Kumar, Co-Founder and CEO or Upstox says, “In line with the government's vision to strengthen financial inclusion, the establishment of the National Financial Information Registry is a welcome move. PAN as a common identifier will simplify the KYC process and also enhance ease of doing business. For individuals, the increase in the income tax rebate from ₹Rs 5 lakh to Rs 7 lakh under the new tax regime will leave more disposable income in the hands of individuals, and thus higher investment potential.”

Dinesh Khara, Chairman, of SBI, says: “Reasonable Government borrowing numbers will support lower interest rates and the move towards a clutter-free new tax regime will significantly spur consumption. Overall, the budget is forward-looking and will support an inclusive economy.”

Nilesh Shah, Managing Director at Kotak Mahindra AMC says, “This budget is a Bahubali budget. With one arrow multiple targets are shot. Fiscal prudence is achieved with lower deficit and path set till FY 26. Consumption is supported through tax cuts. Investment outlay is enhanced. No’s are realistic or conservative to enhance credibility. The budget could have focussed more on asset monetisation but that can be pursued otherwise also depending upon market conditions. Net net a Bahubali budget”

N.S Venkatesh, Chief Executive of AMFI says, “This is an all-out pro-growth Budget that will spur further revival of the economy and will benefit investors who participate in the India growth story. The allocation of a record ₹10 lakh crores towards capital expenditure with a focus on strengthening infrastructure will make India an attractive investment destination. The inclusion of Financial Sector in the 7 priorities will help bring in focus on financialization of savings. The increased rebate and reduction of slabs under the new tax regime will put more money in the hands of the middle class. A one-stop KYC system through the Digi-locker will help reduce the efforts that investors have to put while investing in various financial assets. The inclusion of Financial Literacy books in the libraries run by National Book Trust, Children’s Book Trust and others will go a long way in inculcating a culture of financial savings in the younger citizens of the country.”

Arun Kumar, VP and Head of Research at FundsIndia says, “It is abalanced budget focusing on capex and consumption (tax cuts for individuals), while adhering to the fiscal consolidation path. From an equity market perspective, it's a positive budget as the focus continues on capex-led growth and manufacturing, with the fiscal deficit under control and no negative surprises on the capital gains front. From a bond market perspective, the fiscal deficit and borrowing numbers are in line with expectations.”

The Union Budget 2023-24 has introduced a slew of changes in the Income Tax slabs under the new tax regime, while the reduction of the surcharge rate from 37 per cent to 25 per cent will bring down the tax outgo for high-income groups. Check 5 Top Announcements

While the FM in her budget speech proposed some changes to enhance the appeal of the new tax regime, the hopes of taxpayers opting for the old tax regime were belied as the Budget 2023 failed to do anything for them. Read Full Analysis

Sudhakar Sethuraman, Partner at Deloitte India says, “This budget looks promising for middle class taxpayers with enhanced slabs limits. Revisiting the leave encashment exemption in line with prevalent salary levels is much appreciated. One has to be prepared that new tax regime will be focused going forward. Another point on better targeting of tax concessions and exemptions, limit is fixed for capital gain exemption in case of residential house at INR 10 crore; limit is proposed to be fixed on exemption for proceeds from insurance policies. With eased up compliance and simplified process, the budget can be said to meet the hard-working middle-class taxpayers to a considerable extent.”

Finance Nirmala Sitharaman while presenting Budget 2023 has proposed certain new investment options and also increased maximum limit of certain existing investments. Read details

Finance Nirmala Sitharaman while presenting Budget 2023 has proposed that where aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above Rs 5 lakh, income from only those policies with aggregate premium up to Rs 5 lakh shall be exempt. Read Full Details

CA Manish P. Hingar, Founder at Fintoo says: “As per sec 54/ 54F of Income Tax, 1961, an individual or HUF can take a deduction from gain arising from the sale of a House property or other investments by reinvestment in another house property with no limit. In the current budget proposal effective from 1st April 2023, if the investment in new house property is more than 10 crore, then the deduction amount will be limited to Rs. 10 crores only. In summary, the maximum deduction an individual or HUF can avail is Rs. 10 crores by investing in new house property. It is going to impact the ultra HNI people as they need to pay long-term capital gain on the sale of house property with big ticket size but it will be not a major setback as you can still take a deduction up to Rs. 10 crores.”

Nidhi Manchanda, Certified Financial Planner and Head of Training, Research & Development at Fintoo, says: One of the major setbacks that is given in the finance bill is related to the taxability of the maturity proceeds of a life insurance policy. As per the budget 2023, the maturity proceeds of all life insurance policies that are issued after 1st April 2023 and have an annual premium of more than Rs. 5 Lakhs will now be taxable. One should note that if an individual has more than one life insurance policy which is issued on or after the 1st of April 2023 and also if the aggregate amount of premium of such policies exceeds 5 lacs, then the maturity amount will be taxable.”

“However, the death benefit continues to remain tax-exempt from such life insurance policies, and it is not applicable to ULIPs. This move is definitely negative for the insurance industry and will impact related stocks. Post the budget, the market has seen a fall in the stock prices of HDFC life, SBI Life and Max as they are down by around 7%,” she adds.

Anjan Dasgupta, Partner at DSK Legal says, “The Financial Sector has been identified as one of the priorities of the Government. The push to use DigiLocker as a one stop solution for KYC maintenance is a great move. Consolidation of the KYC process across the financial and banking sector will definitely help the retail customers and the banking industry as a whole. The National Financial Information Registry will also be set up as a repository of financial information. More details on this is still awaited. This will also definitely help the financial sector which relies heavily on real-time financial information of the customers for effective sanctioning and disbursement of its products.”

Commenting on FM’s Budget Speech, Rohit Arora, Tax and Commercial Lawyer, says: “This year‘s Budget has a share of happiness for every participant of the Indian Economy. The Hon’ble FM's announcement of vivaad-se-vishwas scheme version 2 will settle long pending tax & contractual disputes thereby would help the government to garner additional revenues. The calamity cess on cigarettes is lead an applaudable step which would help to create a healthy nation. The rebate under the Income Tax law has been increased from Rs 5 Lakh to Rs 7 Lakh so as to benefit income taxpayers. Further, the tax slabs have been reduced to 5 under New Regime.”

In a bid to make the New Tax Regime more effective to taxpayers, Finance Minister Nirmala Sitharaman has proposed several changes in it in the Budget 2023. For instance, the rebate limit in the new tax regime has been proposed to be increased to Rs 7 lakh from Rs 5 lakh earlier. Thus, persons in the new tax regime, with income up to Rs 7 lakh, will not have to pay any tax now. Read Full Analysis

The Finance Minister today proposed that the limit of Rs 3 lakh for tax exemption on leave encashment on the retirement of non-government salaried employees was last fixed in the year 2002 when the highest basic pay in the government was Rs 30,000 per month. She has proposed to increase this in line with the increase in government salaries to Rs 25 lakh.

For the salaried class and the pensioners including family pensioners, the Finance Minister proposed to extend the benefit of the standard deduction to the new tax regime. Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500, she said.

For those in the highest tax bracket, the Finance Minister proposed to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. The FM said this proposal would result in reduction of the maximum tax rate to 39 per cent. Previously, the effective tax rate for those in the highest tax bracket was 42.74%

Union Minister of Finance Nirmala Sitharaman while presenting Budget 2023 has proposed to introduce an investment scheme for Women investors. For commemorating Azadi Ka Amrit Mahotsav, a 1-time new small saving scheme Mahila Samman Savings certificate will be available for a 2-year period up to March 2025. Read full details

Following are the new tax slabs in the New Tax Regime as per FM Nirmala Sitharaman’s Budget Speech 2023

0-Rs 3 lakh: Nil;

Rs 3-6 lakh: 5% Income tax

Rs 6-9 lakh: 10% Income tax;

Rs 9-12 lakh: 15% Income tax;

Rs 12-15 lakh: 20% Income tax;

Above Rs 15 lakh: 30%

FM Nirmala Sitharaman says that the New Tax Regime will be the default tax regime. However, citizens will continue to reap the benefits of Old Regime.

Standard Deduction under New Tax Regime for individuals with income up to Rs 15 lakh will be Rs 52,400, says FM Sitharaman.

Budget Speech Income Tax Live: Finance Minister Nirmala Sitharaman has proposed to increase the tax rebate to Rs 7 lakh under New Tax Regime. This means no tax will be levied on income up to Rs 7 lakh under New Regime.

FM Sitharaman has proposed Mahila Samman Saving Certificate (MSSC) for a 2-year period. This will offer a deposit facility of Rs 2 lakh at 7.5% interest for two years with a partial withdrawal facility to women.

SCSS Savings Scheme: maximum deposit limits has been increased to Rs 30 lakh

Post Office Monthly Income Scheme has been increased to Rs 9 lakh for a single account and Rs 15 lakh for Join Accounts.

New Banking and RBI regulations. In Budget Speech 2023, FM Nirmala Sitharaman proposes new regulations for Banking, RBI laws

Financial sector regulations will be reviewed. In Budget Speech 2023, FM Nirmala Sitharaman says financial sector regulators will be asked to review existing financial regulations.

In Budget Speech 2023, FM Nirmala Sitharaman says that the Credit Guarantee revamped scheme with Rs 9000 crore in the corups for MSMEs to be implemented from April 1, 2023.

In her Budget Speech 2023, FM Nirmala Sitharaman says that a one-stop solution for reconciliation and updating of identity and address of individuals maintained by various governemnt agencies, regulators and regulated entities will be established using DigiLocker service and Aadhaar will serve as foundational identity

Vimal Nadar, Head of Research, Colliers India, says: “The increase in outlay towards PMAY resonates with the government's committed mission to meeting the housing shortage in the country. This will result in increased investment and heightened activity in the construction sector; opportunities galore for contractors”

Arpit Mehrotra, MD, office services, south India & head of flex, India, Colliers says: “The outlay for the PMAY scheme has been increased from 66% to Rs 79,000 crore, which represents a significant increase in funding for the program. This increase in funding will likely help the government achieve its goal of providing affordable housing to more people and contribute to the overall growth and development of the country”

In her Budget Speech 2023, FM Nirmala Sitharaman says that the KYC process will be simplified by taking a risk-based approach. A one-stop solution for updating of identity will be established using Digilocker service and Aadhaar as foundational identity. The Permanent Account Number (PAN) will be used as a common identifier for all digital systems of govt agencies.

In Budget Speech 2023, FM Sitharaman proposes setting up a National Digital Library for children and adolescents for facilitating the availability of quality books across geographies, languages, genres and levels and device-agnostic accessibility.

In Budget Speech 2023, FM Sitharaman proposes a 66% increase in the budgetary allocation for PM Awas Yojana. She says Rs 79,000 crore will be allocated for PMAY.

In Budget Speech 2023, FM Sitharaman says over 38,000 teachers will be appointed for Eklavya Model Schools in the next five years.

In Budget Speech 2023, FM Sitharaman says the Government will take promotion of tourism on a mission mode with active participation of states, the convergence of Govt programs and public-private partnerships

In Budget Speech 2023, FM Sitharaman says India offers immense attraction for domestic as well as foreign tourists. There is a large potential to be tapped in tourism. The sector holds huge opportunities for jobs and entrepreneurship for youth in particular.

In Budget Speech 2023, FM Sitharaman says the Governments efforts since 2014 have ensured for all citizens, a better quality of life and a life of dignity. The per capita income has more than doubled to Rs 1.97 lakh. In these 9 years, the Indian economy has increased in size from being 10th to 5th largest in the world.

In Budget Speech 2023, FM announces 7 principles as the guiding lights for the Budget in ‘Amrit Kaal’. These are: Inclusive Development, Reaching the Last Mile, Infrastructure, Unleashing Potential, Youth Power, Green Growth and Financial sector

New PM Vikas scheme announced. In Union Budget Speech 2023, Finance Minister Nirmala Sitharaman announces a new PM Vikas scheme for the benefit of marginal workers engaged in creating handicrafts and other items.

In Union Budget Speech 2023, Finance Minister Nirmala Sitharaman says there has been a massive rise in EPFO scheme enrolments, UPI Payments, PM Jan Dhan Account and Insurance Cover.

Union Budget Speech 2023-24 by Finance Minister Nirmala Sitharaman has started. FM says, “Indian Economy has increased from 10th to 5th position in last 9 years.”

Union Budget Speech 2023 by Finance Minister Nirmala Sitharaman has started. FM says, “This is the first Budget in Amrit Kaal. This Budget will build upon previous Budgets for India @100.”

Union Budget Speech 2023-24 by Finance Minister Nirmala Sitharaman will start soon. Stay tuned for Budget 2023 Income tax changes, impact and analysis. Meanwhile, Karnataka CM Basavaraj Bommai tells news agency ANI that FM Sitharaman will present a pro-people Budget that will support the growth of the economy.

S Anand, CEO and Co-Founder of PaySprint says, “Fintech startups are hopeful for GST exemptions until a certain level of revenue is achieved. Liberalisation of the tax structure along with depreciation on the fixed assets used by Fintechs, can go a long way in promoting advancement. Announcement of tax benefits for research & development activities would bolster the ideation and execution of differentiating financial products & services for the masses.”

Ramani Sastri, Chairman & MD of Sterling Developers, says: “Currently, the tax cap on housing loans is INR 2 lakh and it has been the same from last few years. During these years there has been inflation as well. Hence the government should raise the deduction limit for interest payment on home loans from the existing Rs 2 lakh a year to Rs 5 lakh which will add momentum to housing demand, particularly in the affordable segment. There is a specific need for income tax relief on a second home and positive measures with regard to long-term capital gains, which will benefit home buyers in a big way and also stimulate the real estate sector.”

According to Tax2win’s Abhishek Soni, under section 44ADA, the minimum income professionals are required to show 50% of Gross Receipts, which increases the tax burden on small professionals. Professionals are expecting to reduce this rate to 40% to avoid genuine hardship to professionals.

Vivek Jalan, Partner at Tax Connect Advisory says the high personal tax rate for individuals in India stands out as an exceptionally high rate as compared to other countries. The salaried class and the middle class bear the highest brunt of high Income Tax.

Stock market investors are waiting for cues from Finance Minister Nirmala Sitharaman’s Budget Speech 2023. Nifty on Tuesday rose 126.05 or 0.71% to 17,788.20 and BSE Sensex surged 375.02 pts or 0.63% to 59,924.92. Check Live Updates

Finance Minister Nirmala Sitharaman has the opportunity to make the New Tax Regime more attractive in her Budget 2023 speech. She can do so by adding elements that will prove necessary tax savings on home loans, provident fund, insurance, rent, health expenses, school fees etc, says Adhil Shetty of Bankbazaar. Read more insights from Shetty here

Prashant Joshi, Managing Director and Head-Consumer Banking Group, DBS Bank India, says, “Over the past few years, the government has significantly strengthened the ecosystem for digital payments in the country. This momentum has brought a larger section of the population within the fold of the formal banking & financial services. We anticipate that the government will propose measures to incentivise digital transactions, thereby accelerating adoption. Strengthening the last-mile delivery of financial services will continue to remain an area of focus.”