Overview of Proposed Income Tax Structures for Financial Year 2023-24 (Assessment Year 2024-25)

Overview of Proposed Income Tax Structures for Financial Year 2023-24 (Assessment Year 2024-25)

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Introduction

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This summary provides a comprehensive overview of the proposed income tax structures for various entities including individuals (both resident and non-resident), Hindu Undivided Families (HUFs), firms/LLPs, companies, cooperative societies, local authorities, and other specified entities for the financial year 2023-24 (assessment year 2024-25), as outlined in the Finance Bill, 2023, following the budget announcement on February 1, 2023. Key modifications introduced in the budget include adjustments to the new tax regime's tax slabs, an increase in the rebate limit, the introduction of a standard deduction, a reduction in the maximum surcharge rate, and the extension of the new tax regime to additional entities.

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Key Amendments from Budget 2023:

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·????? Modification of tax slabs under the new tax regime.

·????? Rebate limit increased to Rs.7 lakh under the new tax regime.

·????? Introduction of standard deduction in the new tax regime.

·????? Reduction of the highest surcharge rate from 37% to 25% in the new tax regime.

·????? Establishment of the new tax regime as the default option.

·????? Extension of the new tax regime to include AOPs, BOIs, and AJPs.

·????? Introduction of a 15% tax rate for new cooperatives initiating manufacturing until March 31, 2024.

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1. Tax Rates for Individuals for FY 2023-24 (AY 2024-25)

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a)??? Old Tax Regime Rates for Individuals:

·????? Income up to Rs. 2,50,000: Nil.

·????? Rs. 2,50,001 to Rs. 5,00,000: 5%.

·????? Rs. 5,00,001 to Rs. 10,00,000: 20%.

·????? Above Rs. 10,00,000: 30%.

·????? Special considerations for senior and super senior citizens regarding income thresholds.

b)??? Surcharge: Applied based on income levels, with rates from 10% to 37%, subject to specific income ranges.

c)???? Health and Education Cess: A 4% cess is applied on the income tax plus surcharge.

d)??? Rebate under Section 87A: Available for resident individuals with net income not exceeding Rs. 5,00,000.

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2. Tax Rates for HUF, AOP, BOI, and Other Artificial Juridical Persons for FY 2023-24 (AY 2024-25)

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·????? Similar tax brackets as for individuals under the old tax regime.

·????? Surcharge and health & education cess rates are consistent with those applied to individuals.

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3. New Tax Regime for FY 2023-24 (AY 2024-25)

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·????? Provides reduced tax rates and is extended to individuals, HUFs, AOPs, BOIs, and AJPs.

·????? Tax rates range from Nil for incomes up to Rs. 3,00,000 to 30% for incomes above Rs. 15,00,000.

·????? Significant changes include an increase in the basic tax exemption limit, the introduction of a standard deduction, and adjustments in rebate and surcharge rates.

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4. Company Tax Rates for FY 2023-24 (AY 2024-25)

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·????? Domestic Companies: Tax rates vary from 25% to 30% based on turnover, with specific surcharge and health & education cess applicable.

·????? Special Tax Rates: Reduced rates for companies opting for specific sections, with the surcharge for some categories set at a flat 10%.

·????? Foreign Companies: Tax rates are 40% for most incomes, with a 50% rate for specific incomes like royalties and technical service fees, plus applicable surcharge and cess.

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5. Tax Rates for Partnership Firms & LLPs for FY 2023-24 (AY 2024-25)

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?? Taxed at 30%, with a 12% surcharge for incomes exceeding one crore rupees, plus health and education cess.

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6. Tax Rates for Local Authorities for FY 2023-24 (AY 2024-25)

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?? Taxed at 30%, with similar surcharge and cess as applied to firms and LLPs.

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7. Cooperative Societies Tax Rates for FY 2023-24 (AY 2024-25)

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·????? Offers both normal rates with progressive brackets and special tax rates under Section 115BAD.

·????? AMT provisions and a concessional 15% tax rate for new manufacturing cooperatives.

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8. Additional Tax under Section 140B for Updated ITR Filings

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?? Outlines the tax implications for filing updated returns under Section 139(8A),