10 Income Tax changes from 1st April, you must know

income tax changes from 01.04.2023

Income Tax Changes from 1st April 2023: The financial year 2022-2023 is going to end. This month i.e. March is the last month of this financial year. This month is very important for every sector but 1st April 2023 is equally important because of the following changes under Income Tax:

1. Life insurance proceeds taxable for premium over Rs 5 lakh

For life insurance policies issued on or after 1 April 2023, the tax exemption on maturity benefits under Section 10(10D) will only be applicable if the aggregate annual premium paid by an individual is up to Rs 5 lakh. For premiums beyond this limit, the proceeds will be added to the income and taxed at applicable rates.

However, this will not affect the exemption on the amount received on death of the insured. Currently, the maturity proceeds for all types of life insurance policies, which include death benefits, maturity benefits and accrued bonus, are tax-free if the premium does not exceed 10% of the sum assured for policies issued after 1 April 2012, and for policies issued between 1 April 2003 and 31 March 2012, the premium does not exceed 20% of the sum assured.

Read More at: Life insurance policy proceeds over Rs 5 lakh to be taxable: New rule

2. New Section 115BAE

A new section 115BAE is inserted, which provides that following reduced rates of income tax shall apply:

  • Manufacturing co-operative societies (established on or after April 1st, 2023, and commencing production on or before March 31st, 2024): Income tax shall be charged at 15% (plus surcharge of 10% & cess), provided that specified incentives or deductions are not availed. 
  • Income not derived or incidental to manufacturing or production: Income shall be charged at 22%.

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3. Income Tax Changes section 194B and section 194BB

TDS under Section 194B (TDS on winnings from Lottery, Game Shows & Puzzle etc) and section 194BB (TDS on Winning from Horse Races) will be made on the amount or aggregate of the amounts exceeding 10 thousand rupees during the financial year i.e. Rs 10,000 limit will not be checked transaction wise but person wise in a year by the payer.

4. TDS on interest on debenture

Section 193 of the Act provides for TDS on payment of any income to a resident by way of interest on securities. From 1st April, 2023, TDS will be applicable under section 193 on payment of interest on listed debentures.

Read also: Income tax rule on dividend stocks, bonus shares, buyback

5. Section 269SS and 269T limit raised from 2 lakh

No Penalty will be levied for acceptance /repayment of loan by Agricultural Credit Societies (“PACS”) and Primary Co-Operative Agricultural and Rural Development Bank (“PCARD”) for limits on cash transactions with banking companies from or to its members for an amount below Rs 2,00,000 by any mode, earlier limit was Rs 20,000.

Read Also: Cash Receipt Rs 2 lakh or more? Know Income tax penalty

6. New regime is now default Regime

The new tax regime, which was introduced by the Finance Act, 2020, is now the default regime for Individuals, HUF, AOP (other than co-operatives), BOI & AJP.

Employees must give the consent to their employers as the TDS will be deducted from their salary as per new tax regime until unless they intimate that they want to opt for Old income tax regime, although they can change the option while filing Income Tax Return (ITR).

Read Also: Old vs new tax regime – How much tax you need to pay on your income

7. TDS on EPF withdrawal

If the recipient of EPF withdrawal does not provide his PAN, then TDS on the withdrawal will be 20%, instead of the maximum marginal rate which is currently in case.

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8. Higher deduction of TDS and TCS

Sections 206AB and 206CCA (Higher deduction) have been amended to exclude certain persons from the scope who are not required to file a return of income and are notified by the government.

Read Also: Stringent Provisions Section 194Q, 206AB & 206CCA Under the Income Tax Act, 1961

9. Tax treaty relief at the time of TDS

For certain income paid to non-residents or foreign companies, TDS will be deducted at a rate of 20% or the rate specified in a tax treaty, whichever is lower. This relief will be available if the payee provides a tax residency certificate from 01.04.2023.

10. TDS on Cash Withdrawal

TDS Threshold limit for Co-operative society to withdraw cash from bank is increased from Rs 1 Crores to Rs 3 Crores.

Read Also: Everything about Section 194N- TDS on Cash Withdrawal

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