On February 1, Finance Minister Nirmala Sitharaman will deliver the final (interim) Budget before the general elections of 2024, a date that millions of taxpayers nationwide are excitedly anticipating. Taxpayers anticipate a number of things, such as lower tax rates, the introduction of tax exemptions, and lower TDS (tax deducted on source) on virtual digital assets (VDA).
It is essential to first define some basic phrases so that the average taxpayer may grasp them before outlining further expectations.
A rebate is an amount that lowers the overall income tax. Taxpayers can lower their tax component by the amount of the refund, just as they can lower their taxable income through a deduction. It is typically provided to reduce taxpayers’ tax burdens in order to boost economic activity.
A surcharge is imposed on individuals whose income exceeds ₹50 lakh. It only affects the amount of tax due, not the overall income. The tax rate of thirty percent is subject to a ten percent surcharge, making the overall tax obligation thirty-three percent.
This is a type of tax, a levy, that is placed on income tax in order to collect money for certain uses like healthcare and education. The cess rate, which is now 4 percent, is applied at this uniform rate to all income slabs. On tax liability, including surcharge, a cess is assessed.
This won’t be stopped until the government has amassed sufficient funds to accomplish its goals.
Introduced in 2022, this tax regime comprises seven tax bands that offer concessional tax rates. If an individual’s income exceeds ₹15 lakh, they are subject to the highest tax rate of 30 percent, which eliminates the majority of tax deductions.
The new tax system took effect in the 2023–2024 fiscal year as the default tax system.
The former tax system included four tax slabs, with the highest tax rate of 30% being applied to incomes above ₹10 lakh. All tax deductions that are no longer available under the previous tax regime are still available under this one.
This is how taxes are collected at the source of revenue, such as when corporations transfer dividend money or banks transfer interest income.
These are savings vehicles, like PPF, NSC, and NPS, that allow taxpayers to deduct certain amounts from their income taxes. It is important to keep in mind that under the new tax law, a number of these deductions are no longer allowed.
A seller’s excess tax that is gathered from the buyer at the time of sale and deposited with the tax authorities is known as tax collection at source
For example, unless there are extenuating circumstances, a TCS of 20 percent is required of persons who wish to remit more exceeding ₹7 lakh in a financial year.
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