Rajendra Prasad Mohapatra

April 1 marks the beginning of a new financial year. The Union Budget proposals on income tax take into effect from this day.

Earlier in February, these changes were announced by Finance minister Nirmala Sitharaman in her Budget speech.

Let’s have a look at some of the changes in tax rules that will be effective from April 1:

There will be a default adoption of the new tax regime which aims to streamline tax filing procedure and promote greater participation in the new regime.

However, the taxpayers will still have the liberty to stick to the old tax regime if it is more beneficial to them.

The tax slabs will be like this: 

-- Income from Rs 3 lakh and Rs 6 lakh will be taxed at 5%

-- Rs 6 lakh to Rs 9 lakh will be taxed at 10%

-- Rs 9 lakh to Rs 12 lakh will be taxed at 15%

-- Rs 12 lakh to Rs 15 lakh will taxed 20%

-- Rs 15 lakh and above will be taxed at 30%

Besides, standard deduction of Rs 50,000, which was previously applicable to the old tax regime, has now been incorporated into the new tax regime.

This will further decrease taxable income under the new regime.

A few more points to note:

-- The highest rate of surcharge of 37% on income above Rs 5 crore has been reduced to 25%.

-- Maturity proceeds from life insurance policies, which are issued on or after April 1, 2023 where the total premium exceeds Rs 5 lakh, will be subject to taxation.

-- The leave encashment tax exemption limit for non-government employees was Rs 3 lakh but it has now been increased to Rs 25 lakh.