Budget changes for the tax year 2023-24 for Country India Payroll would contain as follows:-
Key changes related to Budget 2023 that affect payroll processing
In the Finance Bill, 2023 that was presented in the parliament to give effect to the financial proposals of the Central Government for the financial year 2023-2024, the following proposals that affect payroll processing are made
1. New Tax Regime to be considered as the default tax regime, while an option to choose Old Tax Regime should be made available. All the employees will now be under New tax Regime by default. If an employee chooses to move to Old Tax Regime, he/she needs to specifically opt for the same.
2. For New Tax Regime, the basic exemption limit will be enhanced from 2.5 Lakhs INR to 3 Lakhs INR. Below are the tax rates applicable for New Tax Regime:
- Up to 3,00,000 INR: NIL
- 3,00,000 to 6,00,000 INR: 5%
- 6,00,000 to 900,000 INR: 10%
- 9,00,000 to 12,00,000 INR: 15%
- 12,00,000 to 1500,000 INR: 20%
- Above 15,00,000 INR: 30%
3. Introduction of Standard Deduction of 50,000 INR in New Tax Regime. Employees opting for New Tax Regime will now get the benefit of Standard Deduction of 50,000 INR from salary.
4. Surcharge rate on income above 5 crores is reduced from 37% to 25% in New Tax Regime. Surcharge will now have different slabs for Old Tax Regime and New Tax Regime. The surcharge rates for Old Tax Regime remain the same.
5. Limit on Tax Rebate to be increased from 5 Lakhs INR to 7 Lakhs INR for New Tax Regime. Employees having income up to 7 Lakhs INR will now get the benefit of rebate u/s 87A in New Tax Regime.
6. The leave encashment exemption limit for non-goverment employees is increased from 3 Lakhs INR to 25 Lakhs INR. Employees under both Old Tax Regime and New Tax Regime will get this benefit.
7. Net winnings from online games are subjected to a withholding tax at a rate of 30%. Now the minimum threshold of 10,000 INR has been removed for tax imposed on winnings from online gaming.
Check out the details at:
Keep an eye on the following SAP note and KBA for more information :-
- SAP Note – 3298673 – FAQ on Budget 2023-2024
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