Understanding the tax change for life insurance policies brought about by Budget 2023 via the recent CBDT guideline.
Changes in tax rules at the end of a financial year is not something that you routinely expect. And not when it is a sweeping change on taxation in your mutual fund! In this article, we are going to discuss the tax changes in mutual funds in 4 parts:
One, the changes effective April 1, 2023 and the categories impacted
The tax impact for you and what you can do to plan better
What should you do with your existing investments?
How should you plan your fresh investments?
If you’re a salaried employee then you’ve probably only recovered from the dilemma of old vs new tax regime and the process of collecting all the bills and proofs of investment to submit to your employer for the financial year that will end on March 31, 2023. So if you’re wondering why we are telling you about tax planning for FY 24 when you’ve only just emerged from under a small mountain of rent receipts and pharmacy bills – it is precisely to avoid the mad scramble that inevitably accompanies tax related deadlines that we advocate planning for taxes from right at the start of the financial year.
This gets even more important with several important changes proposed by Budget 2023 coming into force in FY 24.
In this article we will cover:
the key changes proposed by Budget 2023 that you should be aware of in your tax planning,
what you are giving up under the ‘New Tax regime’’
re-examining the role of ‘tax-saving’ investments in your portfolio and
the all-important question of old vs new tax regime
Some of us may be hoarse from shouting about why tax benefits should not be the reason we buy insurance. Shouting notwithstanding, tax treatment remains a key consideration when buying insurance of almost any sort and this is what we look at in this article.
There are two points in time when the tax aspect will have to be kept in mind:
First at the time of premium payment
Second, at the time of a payout in the form of a claim being met or maturity benefits being paid out.
The trending narrative post the Budget 2023 proposal is that the Budget is disincentivizing savings. The argument goes like this: if the Budget is nudging individuals to move to the New Tax Regime, it likely means that it may eventually phase out many of the deductions available under the Old Tax Regime. Tax incentive is a major consideration for Indians to save.
In this final budget before the elections, there is little by way of big-bang announcements. There are, however, several announcements in the Budget 2023 that do bear implications. There are two aspects to the Budget impact – on one side, there are the provisions that impact your investments and taxes specifically. On the other, there are proposals that have a bearing on prospects for different sectors. Therefore, we’ve broken down our Budget 2023 analysis along these lines.
Deposits, bonds and debt funds are great ways to diversify one’s portfolio. But the taxation on these instruments can decide whether an option is attractive or unattractive on a post-tax basis. Taxation, though varies across instruments and can be quite complex. The fact that not all debt instruments are taxed in the same way compounds the decision making dilemma on which option to choose. This write-up will break down the taxation aspect of popular debt instruments for resident individuals.
You will soon be receiving money on some of the segregated Vodafone Idea debt units of Franklin India.
Our video on this first. If you want to read the Q&A go down. Why this sudden charge of Stamp duty? The stamp duty charge
The Budget proposal 10 days ago that gets rid of DDT changes things for you. You must now take stock of whether it makes sense for you to continue the dividend option in mutual funds and how else to plan for dividends from stocks.
One of the intriguing things about Indian Union Budget presentations is that tweaks to the tax laws that get just a half-a-minute mention in the budget speech often pack a big punch for taxpayers. This year, the move that fits this description is the Centre’s decision to offer a new friendlier tax regime .
Budget 2020 disappointed investors and markets. Is it all as bad as it is made out to be? We’ll discuss that in a more detailed article next week. For now, let’s look at the impact on your personal finance and taxes.
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