Personal Finance News
3 min read | Updated on March 31, 2024, 16:00 IST
SUMMARY
New income tax rules from April 1, 2024: The new tax regime, which has low tax rates but fewer exemptions and deductions, will be the default tax regime. However, taxpayers can still choose the old tax regime if it benefits them.
These new regulations or reforms were announced by Finance Minister Nirmala Sitharaman during her budget speech in February.
The new tax regime, which has low tax rates but fewer exemptions and deductions, will be the default tax regime. However, taxpayers can still choose the old tax regime if it benefits them.
The basic exemption limit has been increased from ₹2.5 lakh to ₹3 lakh. The rebate under the new tax regime has been increased from ₹5 lakh to ₹7 lakh as per Section 87A of the Income Tax Act, 1961.
The income tax slabs as per the new tax regime are as follows:
Taxpayers with income up to ₹7 lakh (or ₹7.5 lakh for individuals with salary income as they can avail ₹50,000 as a standard deduction) will receive complete rebate, taking their taxable income to zero.
The government has reduced the surcharge rate from 37% to 25% for individuals with income exceeding ₹5 crore under the new tax regime.
The tax exemption limit for leave encashment has been increased to ₹25 lakh from ₹3 lakh for non-government employees.
The old tax regime offers various exemptions and deductions, including house rent allowance (HRA), leave travel allowance (LTA), and medical expenses, which can decrease taxable income and lower your tax payments.
The income tax slabs as per the old new tax regime are as follows:
Under the old tax regime, Section 80C of the Income Tax Act allows for a generous reduction of taxable income up to ₹1.5 lakh.
The old regime would benefit when total deductions are more than ₹3.75 lakh on gross total income up to ₹30 lakh.
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