April 1 Tax Changes: Your Complete Guide to Basic Exemption Limits

April 1 Tax Changes: During her Budget speech in February, Nirmala Sitharaman announced these changes.

In a notable change, new tax regimes are adopted by default. Its goal is to streamline the tax filing procedure and promote greater participation in the new regime, which has reduced tax rates but fewer deductions and exemptions. Taxpayers, however, can still maintain their old tax regimes if they find it more beneficial.

According to the last Budget, the basic exemption limit under the new tax regime will increase from 2.5 lakh to 3 lakh effective April 1, 2023, and the rebate under Section 87A of the Income Tax Act, 1961 will increase from 5 lakh to 7 lakh as well. As a result, under the new regime, individuals with taxable incomes up to $7 lakh will receive a full tax rebate, which will exempt them from paying income taxes.

In addition to reducing taxable income, the new tax regime incorporates the standard deduction of $50,000 previously applicable to the old regime.

The surcharge on income over 5 crore has been reduced to 25% from 37%.

On or after April 1, 2023, life insurance policies with a total premium exceeding 5 lakh will be subject to taxation.

For non-government employees, the leave encashment tax exemption limit has been raised to $25 lakh.

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