New Income Tax Regime for the Assessment Year 2024-25

All About New Income Tax Regime for the Assessment Year 2024-25

Hon. Finance Minister Mrs. Nirmala Sitharaman in her budget session held February 1, 2023 announced changes to New Income Tax Regime which will become applicable from April 1, 2023 for the FY 2023-24.

The changes announced in the new tax regime are as follows:

1. New tax regime becomes the default option for taxpayers. However, they have the option to opt for the old tax regime.
2. Income tax?slabs have been revised under the new tax regime.
3. The basic exemption limit hiked to Rs 3 lakh from Rs 2.5 lakh under the new income regime.
4. Standard deduction of Rs 50,000 was introduced for salaried and pensioners under the new tax regime.
5. Rebate under Section 87A increased under the new tax regime for taxable incomes not exceeding Rs 7 lakh. Thus, individuals whose taxable income does not exceed Rs 7 lakh will not have to pay any taxes, if they opt for the new tax regime in FY 2023-24.
6. Highest surcharge rate was reduced to 25% from 37% under the new tax regime.

No changes have been made under the old tax regime for FY 2023-24. The?income tax slab?and rates under the old tax regime remain unchanged for FY 2023-24. Also, no changes have been announced in the deductions and exemptions that are available under the old tax regime. A rebate under Section 87A is available under the old tax regime if taxable income does not exceed Rs 5 Lakh.???????????????????????????????????????????????????????????????.????

The old tax regime offered multiple basic income exemption limits depending on the age of the taxpayer. For individuals below 60 years of age, the basic income exemption limit is Rs 2.5 lakh. For senior citizens aged 60 years and above but below 80 years, the basic exemption limit is Rs 3 lakh. For super senior citizens aged 80 years and above, the basic exemption limit is Rs 5 lakh.

From FY 2020-21, a new, concessional tax regime has been introduced. This tax regime has been revised from FY 2023-24. The new tax regime has lower tax rates as compared with the old tax regime. If individuals opt for the new tax regime, they have to forgo approximately 70 commonly availed tax deductions and exemptions.

The new tax regime has become the default option from FY 2023-24. However, an individual or Hindu Undivided Family (HUF) has to choose between the old tax regime and the new tax regime every financial year. This is applicable only if they do not have any business income.

If an individual taxpayer or HUF has a business income, these taxpayers are allowed to opt for the new income tax regime. However, once opted in, they only have a once-in-a-lifetime opportunity to switch back to the old tax regime. Once they have switched back, they cannot opt for the new income tax regime in future financial years.

Income tax slabs for FY 2023-24 (AY 2024-25) under the New Tax Regime

Budget 2023?has announced changes in the income tax slabs in the new tax regime. The changes in the income tax slabs have been made to make it more attractive for individual taxpayers. The budget has hiked the basic exemption limit to Rs 3 lakh from Rs 2.5 lakh.

The new income tax slabs and changes in rates will apply to incomes earned in FY 2023-24; starting from April 1, 2023.??????????????????????????????????????????????????????????????.

Here are the income tax slabs under new tax regime:

Income tax slabs under new tax regime for FY 2023-24