Synopsis People, who fall in higher income tax brackets and are eligible for various exemptions and deductions under the old tax regime, typically prefer the old tax regime. While the next tax regime will become the default regime, however the old tax regime will continue and people who wish to receive old exemptions and deductions can opt for the old one. PTI While filing income tax returns online the old tax regime has been the default tax regime so far but it is going to change from next year FY24 when the new tax regime will become the default tax regime. "We are also making the new income tax regime the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime," said Nirmala Sitharaman, union finance minister during her budget 2023 speech. People, who fall in higher income tax brackets and are eligible for various exemptions and deductions under the old tax regime, typically prefer the old tax regime. While the next tax regime will become the default regime, however the old tax regime will continue and people who wish to receive old exemptions and deductions can opt for the old one. In absence of any serious tax saving and lower income tax bracket the new tax regime had a very few takers so far. However, the budget 2023 has made significant changes such as section 87A rebate till Rs 7 lakh income and introduction of standard deduction of Rs 50,000 to make it more attractive to the taxpayers. Besides the added attractions of rebate and deductions government has also tweaked the tax slab rates. As per the revised tax slab under new tax regime there is zero tax on income upto Rs 3 lakh, 5% on income above Rs 3 lakh to Rs 6 lakh, 10% on income above Rs 6 lakh to Rs 9 lakh, 15% on income above Rs 9 lakh to Rs 12 lakh, 20% on income above Rs 12 lakh to Rs 15 lakh and 30% on income above Rs 15 lakh. Budget 2023 India unveils income tax bonanza a year before . . . Union Budget 2023: What gets cheaper, what gets. . . Tax slabs rejigged; rebate limit raised in new . . . Union Budget 2023-24: Big announcements Cigarettes to cost more as Budget proposes 16% . . . Budget 2023-24: Where is the govt spending more. . . Budget 2023: Government reduces customs duty on. . . MSME sector lauds revamped credit guarantee sch. . . Conversion of physical gold to e-gold receipt a. . . Major boost to rural economy through enhanced f. . . Sports ministry gets 700 cr-plus boost in Union. . . What’s in the Budget for MSMEs? Here’s a quick . . . 1 2 3 4 5 6 7 8 9 10 11 12 The explanatory memorandum to the budget 2023 states The above-mentioned rates shall apply to all individual or Hindu undivided family or association of persons [other than a co-operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, unless an option is exercised under proposed sub-section (6) of section 115BAC. Thus, rates given in sub-section (1A) of section 115BAC of the Act are the default rates. Further, the income-tax payable in respect of the total income of the person [other than a person who has exercised an option under sub-section (6) of section 115BAC], shall be computed without allowing for any exemption or deduction as provided under clause (i) of subsection (2) of section 115BAC of the Act. However, standard deduction as provided under clause (ia) of section 16 of the Act, deduction in respect of income in the nature of family pension as provided under clause (iia) of section 57 of the Act and deduction in respect of the amount paid or deposited in the Agniveer Corpus Fund as proposed to be provided under subsection (2) section 80CCH of the Act, shall be allowed for the purposes of computing the income chargeable to tax under sub-section (1A) of section 115BAC. If an option is exercised under sub-section (6) of section 115BAC, then nothing contained in sub-section (1A) of section 115BAC shall apply in respect of such person. The option is required to be exercised, - (i) on or before the due date specified under sub-section (1) of section 139 of the Act for furnishing the return of income for such assessment year, in case of a person having income from business or profession, and such option once exercised shall apply to subsequent assessment years; or (ii) along with the return of income to be furnished under sub-section (1) of section 139 of the Act for such assessment year, in case of a person not having income referred to in clause (i) Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp. click here! Wednesday, 01 Feb, 2023 Experience Your Economic Times Newspaper, The Digital Way! 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