The new income tax system of 2023 is coming, and taxpayers must be ready for the upcoming changes. Everything you need to know about the new income tax system will be covered in this blog, from comprehending the various tax rates to utilising an income tax calculator to make sure you’re paying the correct amount.
New Tax Brackets for 2023
Those earning up to 15 lakhs per year would receive tax savings under the new tax bands for income tax 2023. Earnings over 15 lakhs will be taxed at the highest rate of 30%, those between 5 and 10 lakhs at 20%, those between 2.5 and 5 lakhs at 5%, and those under 2.5 lakhs would not be subject to income tax.
Using an Income Tax Calculator
It’s crucial to utilise an income tax calculator to determine your tax due in order to make sure you’re paying the appropriate amount of tax. You may use an income tax calculator to determine how much tax you must pay depending on your income and other deductions.
It’s crucial to keep in mind that the income tax calculator accounts for any unique deductions or investments in tax-saving instruments that you could be entitled to.
Filing Your Taxes
By the deadline of July 31st, taxpayers must file their taxes. You can request an extension of time to file your taxes if you are unable to do so by the deadline.
It’s crucial to keep in mind that even if you receive a tax filing extension, you will still be obligated to pay any taxes that are owed.
Other Changes
There have been further adjustments made in addition to those to the tax rates and the use of an income tax calculator. The taxation of capital gains, dividend income, and rental income are a few of the modifications that fall under this category
Income Tax Planning
It’s crucial to make sure you’re utilising the new tax system to its full potential. To do this, think about using tax planning to make sure your tax savings are maximised.
Tax planning is examining your earnings and outgoings to determine any possible deductions. In order to guarantee that you utilise all of the available deductions and credits, it’s crucial to speak with a tax expert.
Online gaming winnings will be subject to a flat 30% tax
The planned tax rate for online gaming earnings in Budget 2023 is a flat 30%. These wins are subject to taxation in accordance with the income tax bracket that applies to the relevant individual’s income, under the most recent income tax rules.
The Budget 2023 memorandum states that “(viii) to amend Section 115BB of the Act to exclude income from winnings from online games from the scope of said section beginning with Assessment Year 2024–2025, as it is proposed to introduce Section 115BBJ to tax winnings from online games beginning with Assessment Year 2024–2025;
(ix) to add a new section 115BBJ to the Act regarding tax on winnings from online games, which would state that when an assessee’s total income includes any income received as a result of winnings from any online game, the total of the following would determine the amount of income tax that would be due:
• The amount of income tax computed on net winnings from such online games during the prior year, computed in the prescribed manner, at a rate of thirty percent; and
• The amount of income tax that the assessee would have owed if the net profits mentioned above had been deducted from his entire income;
The new legislation, once approved by Parliament, will go into effect on April 1st, 2023.
Gains from cryptocurrencies are now subject to a 30% tax, as of the Union Budget 2022.
The memorandum for Budget 2023 further specifies that the government would establish the approach for figuring online gaming earnings for income tax purposes.
Be aware that whether or not TDS is deducted, online gambling revenues must be declared on an income tax return and tax must be paid on them. The tax code’s “income from other sources” section applies to earnings from mobile games played online.
Income is taxed under the heading at the rate specified by the taxpayer’s income bracket under the existing tax legislation. For instance, a 20% tax rate would be imposed if someone chose the previous income tax system and had a net taxable income of Rs. 8 lakh. Nevertheless, if they decide to use the new income tax system, they would pay a 15% tax rate on their net taxable income of Rs. 8 lakh.
