Wednesday 10 May 2023

Residential status and new tax regime

An NRI, when returning to India, his or her residential status immediately changes to resident individual and he or she needs to change his or her status by informing the bank.  NRO NRE and FCNR accounts is decided as per FEMA (Foreign Exchange Management Act) provisions.

So far as Income Tax provisions are concerned, residential status is governed under section 6 of The Income Tax Act, 1961.

The budget 2020 introduced a new regime under section 115BAC giving Individuals and HUF tax payers an option to pay income tax at lower rates. Starting from FY 2023-24, the new income tax regime will be set as the default option. If you want to continue using the old regime, you must submit a form at the time of return filing.

Read the complete article:  Residential status and new tax regime

Thursday 2 February 2023

Important Budget Proposals related to MSME

Payment Based Deduction: Any payment made to MSME shall be allowed as expenditure only when payment is actually made. This move brings ‘payments to MSME’ under the purview of Section 43B.

At present, Micro enterprises with turnover up to ₹ 2 crore and certain professionals with turnover of up to ₹ 50 lakh can avail the benefit of presumptive taxation. Now the  limits are enhanced to ₹3 crore and ₹ 75 lakh respectively.

Budget 2023-2024 highlights- relief under new tax regime

     Union Budget 2023-2024 provides plethora of benefits under New Tax Regime as compared to the Old Tax Regime. 

Default regime

The new tax regime for Individual and HUF, introduced by the Finance Act 2020, is now proposed to be the default regime. New Tax regime would also become the default regime for AOP (other than co-operative), BOI and AJP.

   Any individual, HUF, AOP (other than co-operative), BOI or AJP not willing to be taxed under this new regime can opt to be taxed under the old regime. For those persons having income under the head “profit and gains of business or profession” and having opted for old regime can revoke that option only once and after that they will continue to be taxed under the new regime. For those not having income under the head “profit and gains of business or profession”, option for old regime may be exercised in each year. 

Tax slabs and tax rates

Substantial relief is proposed under the new regime with new slabs and tax rates as under:

Total Income ()


Rate (per cent)

Upto 3,00,000



From 3,00,001 to 6,00,000



From 6,00,001 to 9,00,000



From 9,00,001 to 12,00,000



From 12,00,001 to 15,00,000



Above 15,00,000                     




Resident individual with total income up to 5,00,000 do not pay any tax due to rebate under both old and new regime. It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to 7,00,000.

Standard Deduction

Standard deduction of 50,000 to salaried individual, and deduction from family pension up to 15,000, is currently allowed only under the old regime. It is proposed to allow these two deductions under the new regime also.


Surcharge on income-tax under both old regime and new regime is 10 per cent if income is above 50 lakh and up to 1 crore, 15 per cent if income is above 1 crore and up to 2 crore, 25 per cent if income is above 2 crore and up to 5 crore, and 37 per cent if income is above 5 crore. It is proposed that the for those individuals, HUF, AOP (other than co-operative), BOI and AJP under the new regime, surcharge would be same except that the surcharge rate of 37 per cent will not apply. Highest surcharge shall be 25 per cent for income above 2 crore. This would reduce the maximum rate from about 42.7 per cent to about 39 per cent. No change in surcharge is proposed for those who opt to be under the old regime.