What the Budget means to you | spcilvly

El presupuesto 2023 propone reducir el recargo a las rentas superiores a <span class=₹ 5 crore from 37% to 29%. This reduces the top marginal tax rate to 39% from 42.74% under the favorable tax regime.” title=”Budget 2023 has proposed to reduce the surcharge on income above Rs 5 crore from 37% to 29%. This reduces the top marginal tax rate to 39% from 42.74% under the concessional tax regime.”>

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The 2023 budget proposes reducing the surcharge on higher incomes $5 crore from 37% to 29%. This reduces the top marginal tax rate to 39% from 42.74% under the concessional tax regime.

The 2023 budget has sweetened the substance of the favorable tax regime. Has proposed increasing the basic exemption limit to $3 lakh, reduce tax rates and improve tax refund limit to $ 7 lakh from the current $5 lakh, which means people with income up to $7 lakh will not pay any tax under the concessional regime. There is also relief for the super-rich: the surcharge on higher incomes $5 crores are being cut from 37% to 29%. This reduces the top marginal tax rate to 39% from 42.74%. The aim is to attract more taxpayers to the simplified concessional regime, as it has found few takers since its introduction. While the proposed changes will significantly reduce the tax expenditure of those who have already opted for the new regime, switching from the old regime to the new will not necessarily benefit them. Back-of-the-envelope calculations show that taxpayers who make investments amounting to $4.2 lakh to avail tax cuts under the old regime will do better if they stick with them. The table above shows the old tax brackets and the new tax brackets of the concessional tax system.

Graphic: Mint

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Graphic: Mint

With the proposed changes, the tax expense of taxpayers already under the concessional tax regime will change starting in fiscal year 24. Income until $7 lakh are exempted from paying any tax with the tax refund limit increased. In fact, with the standard deduction of $50,000 positions available to employees and pensioners, taxpayers in these categories with incomes of up to $7.5 lakh will pay zero taxes. For higher income $7 lakh, the tax outflow has reduced by 20-30%.

For example, a taxpayer with income of $9 lakh will pay $45,000 in taxes versus $60,000 under current slab rates. Similarly, tax expenses $20 lakh income will reduce by about 15%.

The super rich with higher incomes $5 crore people not only benefit from the reduced tax rates but also from the reduced surcharge which will reduce the effective tax rate from 42.7% to 39%. The previous table explains the reduction in tax expenditure with the new flat rates.

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