New Delhi, March 31: Beginning with the new fiscal year (FY 2024-25), India’s income tax regulations will undergo significant changes. These changes, set to take effect from April 1, 2024, are designed to simplify tax planning and offer relief to taxpayers.

The Government introduced a New Tax Regime, under Section 115BAC, as an optional alternative to the pre-existing Old Tax Regime. Enforced from April 1, 2020 (FY 2020-21), it was initially aimed at individuals and Hindu Undivided Families (HUF). New Income Tax Slabs 2023-24: Income Tax Exemption Limit, Rebate Under Section 87A Raised in New Tax Regime; Check Full Details Here.

After operating for three years in this manner, Union Finance Minister Nirmala Sitharaman announced during the Union Budget 2023 that going forward, this New Tax Regime would become the default tax system for those taxpayers who do not express any preference at the commencement of the new fiscal year (FY2025).  Budget 2024: From New Income Tax Slabs to Digital Revolutions, Key Announcements by Modi Government in the Previous 10 Budgets.

New Tax Regime to Become Default Option from April 1, 2024

From April 1, 2024, the New Tax Regime will be the default option. This means that unless a taxpayer specifically chooses to follow the old tax structure, their taxes will be automatically calculated and levied under this new system.

In her last Budget speech (2022-23), Union Finance Minister Nirmala Sitharaman announced that while the new tax regime would be the standard, taxpayers would still have the option to choose the old one. She also proposed increasing the rebate limit from Rs 5 lakh to Rs 7 lakh in the new tax regime. As a result, individuals who opt for the new tax regime will not be required to pay any tax on an annual income of up to Rs 7 lakh.

The revised tax slab applies to the new tax regime. Here are the updated income tax rates:

Total Income:

Up to ₹3,00,000: 0%

₹3,00,001 to ₹6,00,000: 5%

₹6,00,001 to ₹9,00,000: 10%

₹9,00,001 to ₹12,00,000: 15%

₹12,00,001 to ₹15,00,000: 20%

Above ₹15,00,000: 30%

The new tax regime, effective from April 1, 2024, will now include the standard deduction of Rs 50,000, previously applicable only to the old tax regime. This inclusion will further decrease the taxable income under the new system.

Additionally, the maximum surcharge rate of 37% for income exceeding 5 crore has been reduced to 25%. Also, life insurance policies issued on or after April 1, 2023, with a total premium exceeding Rs 5 lakh, will be subject to taxation upon maturity.

Furthermore, the tax exemption limit for leave encashment for non-government employees has been significantly increased from Rs 3 lakh to Rs 25 lakh.

(The above story first appeared on LatestLY on Mar 31, 2024 03:36 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).