The new financial year has started and changes related to income tax rules have also come into effect for every taxpayer. From today, many changes are taking place in the rules of income tax. The new tax regime is in focus, while many types of tax benefits are also in discussion, which are being given somewhere and are being removed somewhere. We are going to tell you about all such income tax rules which will affect you from today.
1. The new tax regime is now the default tax regime
From today the new tax regime is now the default tax regime. Now the complete format on the ITR portal will be according to the new tax regime, if you want to file tax return in the old tax regime, then you will have to choose it separately. You will have the option to file tax in the old tax regime. There has been no change in the old tax regime with exemptions like investment and HRA. Taxpayers paying TDS will be deducted on the basis of tax slab of the new tax regime, in this case you have to choose the regime carefully and pay tax.
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2. Tax slabs have changed in the new tax regime
In the new tax regime, the tax slab has been reduced from seven to six. Now income up to Rs 3 lakh is tax free. In the old tax regime, income up to Rs 2.5 lakh is tax-free. 5% on 3 lakh to 6 lakh, 10% on income 6 lakh to 9 lakh, 15% on income 9 lakh to 12 lakh, 20% on income 12 lakh to 15 lakh, above 15 lakh 30% tax will be applicable.
3. Rebate will be available under 87A in the new tax regime
The exemption limit has been increased under 87A in the new tax regime. Now those having income up to 7 lakh with exemption will not have to pay any tax. The maximum rebate limit is Rs 25,000. That is, those having income up to 7 lakhs will not have to pay tax even without claiming any exemption. Apart from this, the Finance Bill has been amended that individuals earning income slightly above the tax free income of Rs 7 lakh will have to pay tax only on the additional income.
4. Standard deduction will be available for the first time
For the first time, the benefit of standard deduction of Rs 50,000 has also been proposed under the new tax regime. Till now it was available only in the old tax regime. Those salaried employees and pensioners who opt for the new tax regime will also get a rebate of Rs 50,000.
5. Tax Surcharge
In Budget-2023, it has been announced to reduce the high surcharge as well. Now from today the tax surcharge of 37% has come down to 25%. Taxpayers coming above 5 crores annually will now pay 25% surcharge.
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6. Exemption on leave encashment
Now the limit of leave encashment for non-government salaried professionals has been increased from 3 lakh to 25 lakh.
Income from such insurance policies issued after April 1, 2023, on which you pay a premium of more than 5 lakhs annually, will be taxable. That means you have to pay tax on it.
8. Taxation on Mutual Funds
Debt mutual funds whose exposure to equity is less than 35% will no longer get the benefit of long term capital gains tax. If you hold them for a period of more than 3 years, then you will have to pay small term capital gain tax on it. And it will be taxed according to your tax slab.
9. Taxation on house property
Till now taxpayers were entitled to tax incentives under section 54 and 54F for selling any house property or capital asset and investing the proceeds in a new house. But from today the limit of this incentive will be 10 crores. That is, on the amount above this, you will have to pay tax at the rate of 20% (indexation benefit).
11. Under 44AD and 44ADA
limit increased
Threshold under presumptive scheme 44AD for MSMEs has been increased from 2 crores to 3 crores. Whereas for professionals, under 44ADA, it has been increased from 50 lakhs to 75 lakhs. However, the cash receipt should not exceed 5%.
12. Taxation on Gold Conversion
If you convert physical gold into e-gold or e-gold into physical gold from April 1, then you will not have to pay any capital gains tax on it. Long term capital gains tax is applicable on gold. However, if you sell it after conversion, you will have to pay tax as per LTCG rules.
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13. Taxation on Online Gaming
Online gaming has been brought under the purview of taxation. Now under the new section 115BBJ, the income earned from online gaming, be it cash, vouchers or whatever, will attract TDS at the rate of 30%.
The income tax laws under the new tax regime were revised with effect from April 1, 2023, and have been kept unchanged for the current FY, 2024-25 (April 1, 2024-March 31, 2025).
Generally, the new regime is more beneficial unless you utilize deductions exceeding Rs 3.75 lakhs. Utilizing maximum deductions under 80C, 80D, etc., can bring your taxable income under the lower slabs in the old regime, leading to a lower tax burden.
Under the old regime, taxpayers can claim substantial deductions, including those specified in Section 80C, Section 80D, and Section 80TTA of the Income Tax Act. Conversely, individuals choosing the new regime can enjoy reduced tax rates depending on their income bracket, without as many deductions available.
Budget 2023 was amended, allowing to claim a standard deduction of Rs 50,000 in the new regime as well. Thus now you will be able to claim the standard deduction of Rs 50,000 both under the new and old regime.
Any person earning income from a business or profession can only change tax regimes once. Therefore, if a taxpayer, self employed, opt for the new tax regime, they can only switch back to the old regime once in their whole lifetime. > These taxpayers have to file Form 10-IE along with their Income Tax Return (ITR).
You can either opt for the new regime at the outset (by filing Form 10IE earlier) or stick with the old regime with its traditional benefits and deductions. This choice is crucial because it's a one-way street. Once you select a regime, there's no provision to switch back and forth in subsequent years.
Is 80C applicable in new tax regime? No, Section 80C deductions are not available under the new tax regime. How to calculate tax in new regime? From FY 2023-24 (AY 2024-25) onwards, the tax slabs under the new tax regime have been revised, as per the table given in the beginning of this article.
Deductions related to accelerated depreciation, tea development account, site restoration fund, agricultural extension project, and expenditure on agricultural extension project are not permitted under the new tax regime.
For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
After deductions and adjustments, $50,000 of that income may be taxable. The calculator will show that the marginal tax rate for a single person with $50,000 in taxable income is 22%. As discussed above, the U.S. tax system is “progressive,” so not all of your income will be taxed at that rate.
The following points clarify the limit of tax-free income in India. Under the old tax regime, an individual below the age of 60 years is exempt up to Rs. 2.5 lakhs, senior citizens (60-80 years) are exempt up to Rs. 3 lakhs and super senior citizens (above 80 years) are exempted up to Rs.
How much tax is deducted from salary in india? The tax is deducted based on the slab, i.e., up to Rs. 3,00,000 is nil, from Rs. 3,00,000 to Rs. 6,00,000 is 5%, from Rs. 6,00,000 to Rs. 9,00,000 is 10%, from Rs. 9,00,000 to Rs. 12,00,000 is 15%, from Rs. 12,00,000 to Rs. 15,00,000 is 20%, and above Rs. 15,00,000 is 20%.
Section 80D of the income tax act allows tax deductions of up to Rs 25,000 every financial year on health insurance premiums. With Section 80D you can also avail an additional deduction Rs 5,000 on any expenses incurred for preventative health check-ups.
The standard deduction is a flat amount that reduces your taxable income and potentially your tax bill. The amount, set by the IRS, could vary by tax year and filing status—generally, single, married filing jointly, married filing separately, or head of household.
For individual filers, calculating federal taxable income starts by taking all income minus “above the line” deductions and exemptions, like certain retirement plan contributions, higher education expenses, student loan interest, and alimony payments, among others.
Introduction: My name is Merrill Bechtelar CPA, I am a clean, agreeable, glorious, magnificent, witty, enchanting, comfortable person who loves writing and wants to share my knowledge and understanding with you.
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