In 2020, the Indian government announced an optional new tax regime that applies to FY2020-21 and onward. The new scheme offers a lower rate of tax for those who opt for it as well as new deductions and exemptions. This blog post will provide a brief overview of the changes so that business owners can make informed decisions about their taxes.
One of the major changes with this new tax regime introduced in 2023 Budget is the introduction of different tax rates for different income levels. For instance, those earning up to Rs 3 lakhs per year are exempt from taxation while those earning between Rs 3 lakhs and Rs 6 lakhs will be taxed at a rate of 5%. Those earning more than Rs 15 lakhs per year will be taxed at a rate of 30%.
Another change is a reduction in surcharge for high-income individuals earning over Rs 5 crores per year. The surcharge has been reduced from 37% to 25%. Additionally, Section 43B has been amended to cover payments made to MSMEs such that deductions shall only be allowed if made within the permissible period under Section 15 of the MSMED Act, 2006. Finally, Agniveer Scheme has also been introduced which provides relief on income tax in certain cases.
Conclusion: It’s important to stay informed about changes in taxation laws so that you can make sure your business is compliant and taking advantage of all available deductions and exemptions. With this new tax scheme, there are several changes to be aware of including new slab rates, reduced surcharge rates for high-income individuals, amended Section 43B rules covering MSME payments, and Agniveer Scheme which provides additional relief on income tax in certain cases. Understanding these changes can help your business maximize its profits while staying compliant with all applicable laws.