New Income Tax Rules for 2024

Starting from April 1, 2024, significant changes will be introduced to India's income tax regulations for FY 2024-25. The new tax rules, as outlined by Finance Minister Nirmala Sitharaman, bring about notable revisions aimed at simplifying tax processes and providing additional benefits to taxpayers.

• Revised Income Tax Slabs

Under the new tax regime, the revised tax slabs are as follows:

- Income up to ?3,00,000: 0%

- ?3,00,001 to ?7,00,000: 5%

- ?7,00,001 to ?10,00,000: 10%

- ?10,00,001 to ?12,00,000: 15%

- ?12,00,001 to ?15,00,000: 20%

- Above ?15,00,000: 30%

These slabs reflect a more structured approach, with an increased standard deduction for salaried individuals, from ?50,000 to ?75,000. Additionally, the deduction for family pensions is raised from ?15,000 to ?25,000, and the deduction for employers' contributions under Section 80CCD(2) has been enhanced from 10% to 14% of the salary and dearness allowance.

• Surcharge Rate Adjustments

The surcharge rate has been reduced from 37% to 25% for individuals with incomes exceeding ?5 crores, provided they opt for the new tax regime. This reduction is part of the broader effort to make the new tax regime more appealing.

• ?Enhanced Rebate and Exemptions

The rebate limit under Section 87A has been increased from ?12,500 for incomes up to ?5 lakhs to ?25,000 for incomes up to ?7 lakhs. As a result, taxpayers earning up to ?7.5 lakhs annually, considering the standard deduction, will not be required to pay any tax under the new regime.

• Capital Gains and Leave Encashment

From July 23, 2024, significant changes will apply to capital gains taxation. The holding period for determining long-term capital gains (LTCG) has been standardized at 12 months for listed securities and 24 months for other assets. Additionally, the LTCG tax rate under Sections 112A and 112 has been adjusted to 12.5%, and the STCG tax rate under Section 111A has been increased to 20%. Moreover, the exemption limit under Section 112A has been raised from ?1 lakh to ?1.25 lakhs.

For leave encashment, the exemption limit for non-government employees has been significantly increased from ?3 lakhs to ?25 lakhs, applicable upon retirement.

• ?Presumptive Taxation and Other Key Changes

The presumptive taxation scheme now offers higher turnover limits for small businesses (?3 crores) and specified professionals (?75 lakhs), provided 95% of receipts are through digital means.

In conclusion, these updates to the tax regime for FY 2024-25 aim to simplify tax filing, provide relief to taxpayers, and encourage digital transactions. Taxpayers should carefully consider these changes when planning their finances for the new fiscal year.

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