Budget 2024-25: Key Income Tax Rules That Taxpayers Should Know Ahead of Interim Budget
Income tax is a key source of revenue for the government and is used to fund public services, infrastructure, and various welfare programs. In India, income tax is typically calculated as a percentage of an individual's or entity's taxable income, and the rates may vary based on the income level and the nature of the income.
New Delhi, January 27: Income tax is a direct tax imposed by the government on the income earned by individuals, businesses, and other entities. It is a key source of revenue for the government and is used to fund public services, infrastructure, and various welfare programs. In India, income tax is typically calculated as a percentage of an individual's or entity's taxable income, and the rates may vary based on the income level and the nature of the income. As the Union Budget 2024 nears, here’s a quick look at the current income tax rules in India.
Individuals who earn a salary or wages are subject to income tax. The tax is deducted at source by the employer through a system known as Tax Deducted at Source (TDS). The individual receives the net salary after deducting the applicable income tax. Besides salary, individuals may earn income from other sources such as business profits, rental income, capital gains from investments, and interest on savings. All such incomes are considered while calculating the total taxable income. Union Budget 2024-25: What Is Interim Budget? How Is It Different From the Annual Budget? All You Need To Know About.
Income tax slabs fixed in new tax regime last year:
| Income tax slabs (In Rs) | Income tax rate (%) |
| 0-3,00,000 | 0 |
| 3,00,001-6,00,000 | 5 |
| 6,00,001-9,00,000 | 10 |
| 9,00,001-12,00,000 | 15 |
| 12,00,001-15,00,000 | 20 |
| Above 15,00,000 | 30 |
The basic exemption limit under the new tax regime was raised to Rs 3 lakh from the previous Rs 2.5 lakh. This increase will also result in savings of up to Rs 15,000 for those opting for the new tax regime in FY 2023-24. From April 1, 2023, the new tax regime came into effect. Moreover, the rebate amount under section 87A in the new tax regime has been increased from Rs 12,500 to Rs 25,000. Union Budget 2024-25: From Changes in Income Tax Slabs to Increased Deduction Limits and More, List of Changes Common Man Expects From Interim Budget.
Under the new tax regime, the highest surcharge rate applicable to individuals with taxable income exceeding Rs 50 lakh, was reduced from 37% to 25% while a standard deduction of Rs 50,000 would be available for salary and/or pension income. This deduction was previously only available under the old tax regime. Also, a new marginal tax relief was introduced last year for those with taxable income slightly exceeding Rs 7 lakh. Previously, this relief was only available for taxpayers with taxable income exceeding Rs 50 lakh.
(The above story first appeared on LatestLY on Jan 27, 2024 12:02 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).