
This financial year will end on 31st March 2024 and some new tax rules will come into place from 1st April 2024. The Union Budget’s Income Tax proposals for the new financial year will come into effect from April 1, 2024. Finance Minister Nirmala Sitharaman announced several changes during her Budget speech in February 2024. Here’s an overview of the significant changes:
1. Default Adoption of the New Tax Regime
The new tax regime will be the default option for taxpayers. It aims to simplify the tax filing process and encourage more taxpayers to opt for it. The new regime offers lower tax rates but fewer deductions and exemptions. However, taxpayers still have the option to continue using the old tax regime if it proves to be more advantageous for them.
2. Expanded Basic Exemption Limits and Rebate
Under the new tax regime, the basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 lakh. Additionally, the rebate provided under Section 87A of the Income Tax Act, 1961, has been increased to Rs 7 lakh from Rs 5 lakh. Individuals with a taxable income of up to Rs 7 lakh under the new regime will receive a complete tax rebate, exempting them from paying any income tax.
3. Tax Slabs in the New Regime
The tax slabs in the new tax regime are as follows:
- Income from Rs 3 lakh to Rs 6 lakh: 5% tax rate
- Income from Rs 6 lakh to Rs 9 lakh: 10% tax rate
- Income from Rs 9 lakh to Rs 12 lakh: 15% tax rate
- Income from Rs 12 lakh to Rs 15 lakh: 20% tax rate
- Income exceeding Rs 15 lakh: 30% tax rate
4. Extension of Standard Deduction
The standard deduction of Rs 50,000, which was previously applicable only to the old tax regime, has now been extended to cover the new tax regime as well. This adjustment will lead to a reduction in taxable income for individuals opting for the new regime.
5. Decrease in Surcharge Rate
The surcharge rate, which previously stood at 37% for incomes exceeding Rs 5 crore, has now been decreased to 25%. This adjustment leads to a lower effective tax rate for individuals with substantial incomes who opt for the new regime.
6. Taxation of Maturity Proceeds from Life Insurance Policies
Maturity proceeds from life insurance policies issued on or after April 1, 2023, with a total premium exceeding Rs 5 lakh, will be liable for taxation.
7. Increased Tax Exemption Limit for Leave Encashment
The tax exemption limit for leave encashment for non-government employees has been raised from Rs 3 lakh to Rs 25 lakh.
Please note that these changes are based on the information available from the Union Budget 2024 and the announcements made by Finance Minister Nirmala Sitharaman. For more detailed information and personalized advice, it is recommended to consult a tax professional or refer to the official government sources.
I hope to get educated from the group ,keep healthy and warm relationships with all the existing members and request them to reciprocate. With warm regards. VKSHAH 986810906