As the fiscal year 2024-25 kicks off on April 1, 2024, taxpayers brace themselves for a slew of revisions in the income tax regime. Unveiled during Finance Minister Nirmala Sitharaman’s budget speech, these changes promise to reshape the tax landscape. Let’s delve into the details:
Table of Contents
1. Default Tax Regime and Flexibility:
From April 1, taxpayers will default to a revamped tax regime, marked by reduced rates but fewer exemptions and deductions. However, taxpayers retain the liberty to opt for the old tax regime if it aligns better with their financial interests.
2. Augmented Basic Exemption Limit:
The basic exemption limit receives a boost, rising from ₹2.5 lakh to ₹3 lakh. This move aims to ease the tax burden on individuals with modest incomes.
3. Enhanced Rebate Under Section 87A:
Section 87A sees an enhancement in rebate, climbing from ₹5 lakh to ₹7 lakh. This provides additional tax relief for eligible taxpayers, fostering inclusivity and compliance.
4. Understanding the New Income Tax Slabs:
| Income Range | Tax Rate |
|---|---|
| ₹0 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 ₹15,00,001 | 20% |
| Above ₹15,00,000 | 30% |
5. Complete Rebate for Taxpayers:
Taxpayers with income up to ₹7 lakh (or ₹7.5 lakh for salaried individuals) will enjoy a complete rebate, reducing their taxable income to zero.
6. Surcharge Rate Reduction:
High-income earners witness a reduction in surcharge rate, plummeting from 37% to 25% for individuals with income surpassing ₹5 crore. This aims to foster progressive taxation and economic growth.
7. Expanded Tax Exemption for Leave Encashment:
Non-government employees receive a substantial hike in the tax exemption limit for leave encashment, scaling up from ₹3 lakh to ₹25 lakh.
