Income Tax Rule Changes in 2024: Major changes have been made in many rules related to income tax during 2024, which can affect your tax liability at the time of filing ITR in 2025.
Income Tax Rule Changes in 2024: Major changes have been made in many rules related to income tax during 2024, which can affect your tax liability while filing ITR i.e. income tax return in 2025. These changes include changes made in the rules related to tax slab, standard deduction, capital gains tax and TDS. Before the year 2024 ends, let us take a look at these important changes and their effects.
1. New tax slabs implemented
The government has announced new tax slabs for the financial year 2024-25, which will help in saving more tax under the new tax regime. These are the new tax slabs:
Rs 0-3,00,000: 0%
Rs 3,00,001-7,00,000: 5%
Rs 7,00,001-10,00,000: 10%
Rs 10,00,001-12,00,000: 15%
Rs 12,00,001-15,00,000: 20%
Above Rs 15,00,001: 30%
Under the new tax slab, a taxpayer can save up to Rs 17,500 extra.
2. Increase in standard deduction limit
With the new tax slab, the standard deduction limit has also been increased.
- For general employees: Rs 50,000 to Rs 75,000
- For family pensioners: Rs 15,000 to Rs 25,000
Due to the increase in standard deduction, salaried and pensioner taxpayers can get more benefits under the new tax regime.
3. Higher deduction on employer contribution in NPS
The deduction limit on employer contribution in National Pension System (NPS) has been increased from 10% to 14%. This benefit is available only under the new tax regime. This will increase tax savings under the new tax regime. However, if the total contribution to EPF, NPS and superannuation fund exceeds Rs 7.5 lakh, then this additional amount will be taxable.
4. Changes in capital gains tax rules
New rules have been introduced to simplify taxation on capital gains:
- Tax on short-term capital gains (STCG) 20%
- Tax on long-term capital gains (LTCG) 12.5%
- No tax on equity-related LTCG profits up to Rs 1.25 lakh in a financial year.
The new rules will make capital gains tax calculation easier. However, tax liability may increase for some investors.
5. Change in holding period
The holding period has been divided into two categories to determine the type of capital gains. This period has been kept at 12 months for listed assets and 24 months for non-listed assets. After these changes, taxpayers will also have to keep tax savings in mind while deciding to sell assets.
6. Simplifying TDS rates
TDS rates have been simplified for certain sources of income. This will reduce deductions and benefit taxpayers. However, there is no change in TDS on salaries, virtual digital assets, lotteries, racing, transfer of immovable property, contracts and payments made to non-residents.
7. Claim TDS / TCS credit on other income
Salaried employees can now adjust the credit of TDS / TCS deducted on other income with the TDS deducted on their salary. This will help salaried people to manage their cash flow.
8. New tax rule on share buyback
The amount received on share buyback will now be taxable in the hands of personal taxpayers according to their income tax slab. Due to this, the tax liability of taxpayers falling in higher tax slabs may increase, while those in lower slabs will benefit.
9. TCS on notified luxury goods
TCS (TCS – Tax collected at source) will be applicable on the purchase of notified luxury goods worth more than Rs 10 lakh. This may increase the cost of these things. This new rule is going to be implemented from January 1, 2025. However, the government has not yet released the list of luxury goods nor has it been clarified how TCS collection will be done.
10. Vivaad se Vishwas Scheme 2.0
The government has launched Vivaad se Vishwas Scheme 2.0, which will help resolve disputes between taxpayers and the Income Tax Department. This scheme will provide an opportunity to resolve pending cases.
All these changes in 2024 can affect your ITR filing in 2025. Keeping these changes in mind, it is very important to plan on time, so that you can manage your income tax liability properly.
