Greetings,
Now that the Union Budget 2023 presentation is over….the various
images and posts that get shared on Whatsapp University should be confusing
you a lot. Isn't it
I thought why not add my own views, version, and opinion and make you more
confused!!
Ha ha… oops… give you MORE CLARITY and help you plan
better
Disclaimer: I am not a Certified Tax Planner and you are
better off consulting your CA before filing your Taxes
So…. Lets deep dive
THE MAIN HIGHLIGHTS WHICH AFFECT YOU AND ME
1. Minimum Tax Exemption raised to Rs.7 lakhs in the New Tax Regime
2. The Senior Citizen Savings Scheme limit is doubled
from 15 lakhs to 30 lakhs
3. Post office MIS scheme increased to 9 lakhs per
individual from the Existing 4.5 lakhs and for JOINT from 9 lakhs to 15 lakhs
4. For women folk, a NEW Small Savings Scheme has been
introduced. Rs.2 lakh max can be invested earning an interest of 7.5% per annum
5. Surcharge at the highest rate is reduced from 37% to
25%
6. Overseas remittance above 7 lakhs TCS (Tax Collected
at Source) increased from 5% to 20%
7. Income recd from Insurance Policies (Traditional
policies) where the premium paid is above 5 lakhs WILL NO LONGER BE EXEMPT FROM
TAXES
Income from traditional insurance policies
where the premium is over Rs 5 lakh will no more be exempt from taxes
WHO GAINS?
1. Senior Citizens gain hugely in this budget
With the Senior Citizen Savings Scheme limit doubled from
15 lakhs to 30 lakhs, they have a much bigger basket to route their money into a
Guaranteed Safe scheme
In fact,
Married Senior Citizen Couples can now together invest up
to:
- Rs 60 lakh in Senior Citizen Savings Scheme (SCSS)
- Rs 15 lakh in Post Office – Monthly Income Scheme (PO-MIS)
- Rs 30 lakh in PMVVY (7.4% interest and runs for a
period of 10 years)
SCSS is truly attractive with 8% interest rate and that
too payable quarterly. SCSS is for a period of 5 years and can be extended by 3
years.
PO-MIS pays 7.1% interest and must be considered only after
options are exhausted
The Senior Citizen's Pensioners have been given the benefit
of Standard Deduction even in the New Tax Regime!
2. ULTRA HNIs
Yes...The rich will get richer!!
Due to the surcharge reduction from 37% to 25, the net effective tax rate comes down from
42.74% to 39% thus for someone earning about 5 CRORES the saving will be as high
20 lakhs per annum !
3. WOMEN FOLK
With a new instrument named MAHILA SAMMAN SAVING CERTIFICATE introduced, women
can now deposit Rs.2 lakhs at a fixed rate of 7.5% interest for a period of 2
years.
Definitely better than an FD and moreover it's guaranteed by the Government!
Sukanya Samruddhi Scheme continues but it's locked and one
can invest only up to 15 years of a girl child’s age. This MSSC can be a good
alternative as a partial withdrawal option is there
LOSERS
1.
Individual earning less than 8 lakhs and
using a host of deductions u/s 80c, 80D, and having a Home Loan loses a lot as he
has nothing offered either in terms of rebates or exemption.
2.
Going on a Foreign Tour? Be ready to shell
out more. Yes.. earlier you were paying 5% TCS (Tax Collected at Source) and
now this has been increased to 20%. BTW, you can claim the TCS credit while
filing your Tax return but yes your money GOES out of your bank and you need to wait
till you pay taxes
VERY IMPORTANT:
Up to 7 lakhs exemption in NEW TAX REGIME does not mean you pay only 10% after
7 lakhs… no…
For
income upto Rs.6,99,000 it NIL
But
once you touch Rs.7,00,000 it's calculated as follows
0
to 3 lakhs = NIL
3
lakhs to 6 lakhs =5% which means 5% * 3 lakhs = Rs.15,000
6
lakhs to 7 lakhs = 10% which means 10% * 1 lakh = Rs.10,000
Thus
Rs.15,000 + Rs.10,000 so you are paying Rs.25,000 on an income of Rs.7 lakhs
NEW TAX REGIME OR
OLD TAX REGIME?:
On the face of it the NEW TAX REGIME looks beneficial but deeper analysis tells a different story, especially for those earning less than Rs.10 lakhs per annum
In fact, when we dig deeper, Rs.15.5 lakhs is the BREAK-EVEN
The NEW Tax Regime is easy to calculate due to no
deductions and exemptions to be calculated and thus gives the feeling of having
MORE in hand
but due to this FEELING OF HAVING MORE, the tendency to
SPEND will definitely rise and thus a Financial Expert is a MUST.
An AMG (Advisor/Mentor/Guide) will ensure that you also
THINK AND PLAN for your future financial obligations be it your Children's
Education, your Own Retirement
Under the Old Tax Regime, you were sort of FORCED to save
by investing in schemes/plans of 80C and thus at least some part of your future
financial obligations were taken care of by default but the New Tax Regime sort
of makes you feel like a FREE BIRD and thus your Future Financial Security
depends now on your BEHAVIOUR!!
Before thinking of switching to a NEW TAX regime
note that the new tax regime will not give you the
benefit of deductions under
Section 80c, 80D
and also not benefit of Housing Loan Interest besides the
HRA benefit
Old Tax Regime still looks attractive to the majority of people especially if your earning is less than 10 lakhs
Of course... do consult your CA for the final assessment
#DontRetireRich #WealthOfWisdom
I have shared some Options both with and without deductions
(created by our dear friend Ramesh Bhat of Aniram, Chennai)
Go through the same and you will get a clear idea of what to choose
All the very best
Srikanth Matrubai
All the best,
Regards,
Srikanth Matrubai
https://t.me/joinchat/AAAAAELl4KUnaJzi-JJlDg/
