Income Tax Rules FY 2024-25: Income Tax Rules FY 2024-25: New vs old tax regime – 6 rules salaried individuals should know | Business


income tax rules For FY 2024-25: As Financial year 2024-25 It is important to be aware of the income tax rules that have started from April 1. Even if the changes are announced in the Union Budget or during the year, they generally come into effect from the beginning of the new financial year. This year, no changes were announced for FY 2024-25 in the interim budget, so the income tax rules from last year will remain unchanged.
Here are six income tax rules that will come into effect from April 1, 2024:

1. Choosing between the old and new income tax regimes

For TDS (tax deducted at source) on salaries, employees will have to choose between the old and new tax regimes, an ET report said. The default option is the new tax regime. If you do not inform your employer about choosing the old tax system, they will deduct tax from your salary based on the new system. Be sure to do this promptly if requested by your employer.

2. Basic exemption limits

There is a difference in the basic exemption limit between the old and new tax regimes. If a person's income does not exceed this limit in a financial year, he does not have to pay tax. Currently, under the new tax regime, income up to Rs 3 lakh is tax-free for all individuals regardless of age. In the old tax system, the exemption limit varies with age. For individuals below 60 years of age, Rs 2.5 lakh is free from tax, for senior citizens aged 60 to 80 years, it is Rs 3 lakh, and for extremely senior citizens aged 80 years and above, This is Rs 5 lakh.
Income tax slab under the new tax regime

Income Limit (in Rs) Income Tax Rate (%)
0-3,00,000 0
3,00,001-6,00,000 5
6,00,001-9,00,000 10
9,00,001-12,00,000 15
12,00,001-15,00,000 20
15,00,001 and above 30

Income tax slab under old tax system

Income Limit (in Rs) Income Tax Rate (%)
0-2,50,000 0
2,50,001-5,00,000 5
5,00,001-10,00,000 20
10,00,001 and above 30

3. Tax exemption

Income tax laws provide tax exemption to resident individuals in both tax regimes. This exemption, available under Section 87A, eliminates the need to pay tax if the net taxable income remains below a certain limit.
The new tax regime provides more exemptions than the old one. Under the new regime, individuals can get a rebate of up to Rs 25,000, making income up to Rs 7 lakh tax-free. In contrast, the old tax regime provides exemption of up to Rs 12,500, making income up to Rs 5 lakh tax-free.

4. Deductions and Exemptions: New vs. Old System

Both tax systems provide deductions and exemptions, but the older system offers more. Examples of deductions and exemptions available under the old tax regime include standard deduction, Section 80C for investments and expenses up to Rs 1.5 lakh, Section 80D for health insurance premiums and Section 80CCD(1B) for additional NPS investments up to Rs 50,000. Are included. Additionally, deduction can be claimed for home loan interest, education loan interest and charitable donations up to Rs 2 lakh. Additionally, individuals can also claim exemption for House Rent Allowance (HRA) and Leave Travel Allowance (LTA).
The new tax regime provides only two deductions for individuals. These include the standard deduction of Rs 50,000 from salary and pension income and deduction under section 80CCD(2) for employer's contribution to the NPS account. Family pensioners are also eligible for a standard deduction of Rs 15,000 under the new tax regime. It is worth noting that these deductions are available under the old tax system also.
Claiming qualified deductions allows individuals to reduce their net taxable income and tax liability, depending on the tax regime chosen.

5. Filing Income Tax Return (ITR)

If you intend to opt for the old tax regime while filing your income tax return this year, make sure to file your ITR before the July 31 deadline. This is important because the new tax regime is the default option, and income tax rules allow individuals to opt for the old tax regime only if their ITR is filed on time. If you file delayed ITR between August 1 and December 31, your tax liability will be calculated entirely based on the new tax regime.

6. Surcharge Rates

Higher income individuals choosing the new tax regime will face a lower surcharge rate. Under the new tax regime, the rate on income above Rs 5 crore has been reduced from 37% to 25%. However, if the individual chooses the old tax regime, a surcharge rate 37% will be applicable.

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