If you are employed and opt for the new tax regime in 2024-25, you can avail the standard deduction of Rs 50,000. With this, your income up to Rs 7.50 lakh will be tax free. This exemption of Rs 50,000 was earlier available only in the old tax slab.
The new financial year 2024-25 is starting from 1st April i.e. Monday. The beginning of a new financial year is always important in terms of personal finance as most of the budget proposals related to income tax come into effect from this day. Many tax related rules are changing from April 1. The new tax system will now become the default.
Selection of tax slab is necessary
If till now you have been filing Income Tax Return (ITR) according to the old tax system, then it is important to know that the new tax system has been defaulted in the country from April 1, 2024. This means you have to choose your tax slab every year. If he does not do this, he will automatically shift to the new tax system. Many amendments have been made in the new system. Its purpose is to encourage more taxpayers to opt for it. In this, income up to Rs 7 lakh is tax free.
Benefits of standard deduction
If you are employed and opt for the new tax regime in 2024-25, you can avail the standard deduction of Rs 50,000. With this, your income up to Rs 7.50 lakh will be tax free. This exemption of Rs 50,000 was earlier available only in the old tax slab.
Tax rates under new slabs
Annual Income Rates
0 to 3 lakh rupees- 0%
Rs 3 to 6 lakh – 5%
Rs 6 to 9 lakh – 10%
Rs 9 to 12 lakh – 15%
Rs 12 to 15 lakh – 20%
More than Rs 15 lakh – 30%
Basic exemption limit Rs 3 lakh
Under the new tax regime, the basic exemption limit has been increased from Rs 2.5 lakh to Rs 3 lakh. Additionally, the exemption under Section 87A of the Income Tax Act, 1961 has been increased from Rs 5 lakh to Rs 7 lakh. This means that in the new regime, individuals with taxable income up to Rs 7 lakh will not have to pay tax as they are eligible for full tax exemption.
leave encashment
If you are a non-government employee, you can avail tax exemption up to Rs 25 lakh as leave encashment instead of Rs 3 lakh. For this, a provision has been made in Section 10(10AA) of the Income Tax Act.
Life insurance
If your insurance policy is issued after April 1, 2023 and your total premium exceeds Rs 5 lakh, then on maturity you will have to pay tax as per the slab.
Surcharge
If your annual income is more than Rs 5 crore, now you will have to pay only 25 percent surcharge instead of 37 percent.
Other important things
Individual taxpayers can choose between the old and new tax regime every year according to their income.
Professionals or commercial companies can select the slab once.
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