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Approximately 70 deductions and exemptions from the previous regime have been discontinued. Understand it in detail in this article.

Navigating the New Tax Regime: Revised Slabs, Deductions, and Key Changes in Budget 2023

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"Navigating the New Tax Regime: Revised Slabs, Deductions, and Key Changes in Budget 2023"

Pranav Karnad

From budgeting to expenses management and everything in between

<p>
    To attract more taxpayers to select the new tax regime as their default, the Union budget has added deductions from the old budget to the new one. For correctly filling Form 16 of your ITR, understanding what deductions are allowed in the new tax regime is necessary.
   </p><p>
    The new tax regime offers a dual system of taxation with multiple deductions and exemptions. Most exemptions and deductions have been discontinued. These changes involve standard deductions for pensioners, salaried individuals, and family pensioners.
   </p><p>
    Learn about the new tax regime deductions with Fi Money today!
   </p><h2>
    What are the alterations provided in the new tax regime?
   </h2><p>
    The new tax regime has revised the tax slabs in Budget 2023 for deduction applicability. The post-budget tax rates in the new budget have been recalibrated with respect to the age of taxpayers as well as basic income. The slab changes are as follows:
   </p><ul role="list">
    <li>
     Income up to ₹3 lakh: No tax
    </li>
    <li>
     Income from ₹3 lakhs to 6 lakhs: 5%
    </li>
    <li>
     Income from ₹6 lakhs to 9 lakhs: 10%
    </li>
    <li>
     Income from ₹9 lakhs to 12 lakhs: 15%
    </li>
    <li>
     Income from ₹12 lakhs to 15 lakhs: 20%
    </li>
    <li>
     Income exceeding ₹15 lakhs: 30%
    </li>
   </ul><p>
    A health and education cess of 4% is applicable on these tax slabs. Besides, you can also get a rebate worth ₹12,500 in section 87A of the IT Act. The rebate is applicable on income up to ₹7 lakhs for taxpayers in the new regime.
   </p><h2>
    Which deductions are allowed in the new tax regime
   </h2><p>
    The deductions in the new regime have been changed extensively. Approximately 70 deductions, as well as exemptions from the previous tax regime, have been discontinued now. Some of the important deductions you must keep in mind are:
   </p><ul role="list">
    <li>
     Deductions as mandated in Section 80 CCD (2)
    </li>
    <li>
     Employer’s EPF Contribution up to 12% of basic income with dearness allowance
    </li>
    <li>
     Payouts of gratuity after completion of 5 years of service
    </li>
    <li>
     Leave encashment under section 115 BAC
    </li>
    <li>
     Interest and maturity sum from Sukanya Samriddhi Yojana and PPF
    </li>
    <li>
     The proceeds from voluntary retirement
    </li>
    <li>
     Transport allowance for specially-abled people
    </li>
    <li>
     Interest on a loan required for a let-out property
    </li>
    <li>
     Conveyance allowance for the usage of an official vehicle
    </li>
    <li>
     Standard deduction of the amount ₹50,000
    </li>
    <li>
     Family pensioners' deduction of ₹15,000
    </li>
   </ul><p>
    Popular tax deductions which the Budget 2023 disallows are as follows:
   </p><ul role="list">
    <li>
     Concession of leave travel
    </li>
    <li>
     Rent allowance for house
    </li>
    <li>
     Education allowance for children
    </li>
    <li>
     Professional tax
    </li>
    <li>
     Housing loan interest
    </li>
    <li>
     Perquisites and allowances, including coupons
    </li>
    <li>
     Deduction for certain investments under section Chapter VIA
    </li>
    <li>
     Deductions under section 80 include premiums for medical insurance, education loan interest, savings account interest, contribution towards NPS, and more
    </li>
   </ul><h2>
    The Concluding Note
   </h2><p>
    The Budget 2023 has made the new tax regime as the only tax regime in the country. But, the deductions in the new tax regime are provided to make the transition from the old to the new tax structure easy. Keeping a note of these changes is vital to plan your savings better with Fi money.
   </p><p>
    Our money management portal helps you understand where your expenses are going. The AI-powered Analyser provides insights into your spending through easy categorizations, including by brand, time, etc. The tool also provides an inbuilt credit score hub.
   </p><h2>
    Frequently Asked Questions
   </h2><h3>
    1. Are there any deductions in the new tax regime?
   </h3><p>
    The new tax regime offers various deductions for salaried individuals and pensioners. These deductions are applicable as per the revised tax slabs.
   </p><h3>
    2. Which exemption is allowed in the new tax regime?
   </h3><p>
    Various exemptions and deductions are provided in the new tax regime. They are:
   </p><ul role="list">
    <li>
     Deduction on home loan interest
    </li>
    <li>
     Employer’s contribution towards NPS and EPF
    </li>
    <li>
     The Maturity sum received from PPF
    </li>
    <li>
     Interest in Post Office Savings Account
    </li>
    <li>
     Gratuity from employer
    </li>
    <li>
     Leave encashment with retirement
    </li>
    <li>
     Voluntary retirement benefits
    </li>
    <li>
     Monetary retirement benefits along with death compensation
    </li>
    <li>
     Travel allowances for disabled individuals
    </li>
    <li>
     Employer's gifts up to ₹5000
    </li>
   </ul>

Navigating the New Tax Regime: Revised Slabs, Deductions, and Key Changes in Budget 2023 | Fi Money

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