Standard Deduction Relief: From April 2023 onwards, the process of calculating savings and income
tax will start again. Due to the entry into force of the new default tax regime this year, there has been a
lot of interest in this topic.
The government has also given tax relief worth Rs 2 Lakh more than under the old regime. But somehow in the new scheme instead of 7, you can get a direct deduction of Rs 7.5 lakh.
You may also like- Master of Form 16 Part A&B for the F.Y.2022-23 & A.Y.2023-24 which can prepare at a time 50 Employees Form 16 Part A&B
In Budget 2023, the government increased the income tax exemption limit to Rs 7 Lakh to attract the new tax regime. This is a big relief for middle-class and self-employed people. People whose annual income is less than Rs 7 lakh can deduct tax on all their income under this scheme. However, if I tell you that the range is Rs 7.5 Lakh and not Rs 7, no one will believe you.
In fact, in the financial year 2023-24, after many years, the government has given a direct exemption to the Income Tax Board. Although the new tax regime was introduced two years ago, its days are practically over. The budget announced the implementation of a new tax regime. To date, the old tax regime has been implemented by default. This means that now you don’t tell HR which mode to choose, so the income tax calculation will start from the new mode. If you intend to pay old regime tax, you must notify your employer in advance.
Who will get the 7 Lakh Tax Relief?
In the budget, the finance minister said that the direct income tax exemption under the new tax regime will be Rs 7 Lakh. However, there will be no tax deduction on any type of investment under this scheme. In particular, professionals who cannot make any investments now do not have to pay income tax up to 7 Lakh. However, under the new regime, full income tax exemption rules apply, allowing you to enjoy tax relief even after reaching Rs 7 lakh.
You may also like- Master of Form 16 Part B for the F.Y.2022-23 & A.Y.2023-24 which can prepare at a time 50 Employees Form 16 Part B
How to save more than 50 thousand
In the new regime, to increase the tax exemption limit above Rs 7 lakh, you have to claim Standard Deduction. According to the Income Tax Act, every salaried person gets a deduction of Rs 50,000 instead of the standard deduction. However, its benefits are only available to employees. So, if you opt for the new tax regime this year, don’t forget to claim the standard deduction in your next ITR return.
Make more money than that
If someone’s annual income is more than Rs 7.5 lakh and he avails savings option, he should stay away from the new tax regime. In fact, under the old regime, tax exemptions were given up to 5 Lakh. Tax must be saved in the form of investment income.
Those who cannot afford to invest to increase inflation must adopt a new regime. Here, even after the 7.5 lakh tax exemption, if your income is higher, the tax rate will be lower. Also, under the new regime, up to 3 lakhs of tax have been waived, due to which you can save several thousand in the tax form.
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