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.
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 |
: |
Nil |
|
From 3,00,001 to 6,00,000 |
: |
5 |
|
From 6,00,001 to 9,00,000 |
: |
10 |
|
From 9,00,001 to 12,00,000 |
: |
15 |
|
From 12,00,001 to 15,00,000 |
: |
20 |
|
Above 15,00,000 |
: |
30 |
Rebate
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
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.
