No Tax Slab Shakeup This Year (Finance Ministry Clarifies)
There are no recent adjustments (changes) to the tax system as of April 1, 2024 (previously stated as ‘effective from’). Anyone can still weigh their options (choose) between the old and new tax plans based on their financial situation (previously stated as ‘based on your preferences and financial circumstances’).
Anyone can retain the freedom to switch back (opt out of) to the old plan if they choose the new one until they file their return for the tax year 2024-25 (previously stated as ‘opt out of the new regime until filing their return for Assessment Year 2024-25’).
Individuals without business income can even go back and forth (alternate) between the plans each year (no change in wording). Some misconceptions (inaccuracies circulating) about the new tax system have been spreading online.
Important instructions :
- The new tax scheme (section 115BAC(1A)) introduced last year (in 2023) continues unchanged as of April 1, 2024. This differs from the traditional plan (without exemptions).
- The new tax plan applies to individual filers (people who file taxes themselves, not companies or businesses). It is the standard selection (default option) starting from the tax year 2023-24 (financial year). The corresponding assessment for taxes (filing year) is 2024-25 (assessment year).
- The new one also offers lower tax rates overall (significantly lower). However, unlike the old regime, you won’t be able to claim many tax breaks (exemptions and deductions) except for the standard deduction of Rs. 50,000 for salary and Rs. 15,000 for family pension.
- While the new tax plan is the go-to option (default regime), taxpayers have the flexibility (freedom) to choose whichever system (old or new) works best for their situation (beneficial to them).
Individuals can also switch out (opt-out) of the new tax plan until they file their return for the tax year 2024-25 (assessment year). Even better, individual filers (eligible persons) without business income can go back and forth (choose) between the plans each year (financial year). This means they can pick the new tax plan in one year and the old plan in another, depending on what works wonders for them.
Income tax slabs according to the new tax regime:
Income from ₹0 to ₹3,00,000: 0% tax rate
Income from ₹3,00,001 to ₹6,00,000: 5%
Income from ₹6,00,001 to ₹9,00,000: 10%
Income from ₹9,00,001 to ₹12,00,000: 15%
Income from ₹12,00,001 to ₹15,00,001: 20%
Income above ₹15,00,000: 30%
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Tax Brackets under the Old System:
- There’s no tax on income up to ₹2.5 lakh (exempt from taxation).
- Income between ₹2.5 lakh and ₹5 lakh is taxed at a rate of 5%.
- Income from ₹5 lakh to ₹10 lakh falls under the 20% tax bracket.
- Any income exceeding ₹10 lakh is taxed at a rate of 30%.
