Introduction of New Income Tax Slabs
New Delhi, July 23: In a significant move aimed at providing relief to the salaried class, Finance Minister Nirmala Sitharaman has unveiled a new set of income tax reforms for the fiscal year 2024-25. These reforms include updated income tax slabs, a higher standard deduction, and other measures designed to simplify tax laws, encourage compliance, and foster economic growth.
Revised Income Tax Slabs for Personal Income
The new tax slabs for personal income tax offer a structured approach to taxation:
- Nil tax: Up to an income of Rs 3 lakh.
- 5% tax: On income between Rs 3-7 lakh (previously Rs 3-6 lakh).
- 10% tax: On income between Rs 7-10 lakh (previously Rs 6-9 lakh).
- 15% tax: On income between Rs 10-12 lakh (previously Rs 9-12 lakh).
- 20% tax: On income between Rs 12-15 lakh.
- 30% tax: On income above Rs 15 lakh.
These changes are intended to offer more relief and better tax planning options for individuals.
Increased Standard Deduction and Pension Scheme Contribution
The standard deduction has been increased from Rs 50,000 to Rs 75,000, providing additional relief to salaried individuals. Similarly, the deduction from family pension has been raised from Rs 15,000 to Rs 25,000 under the new tax regime.
Furthermore, the deduction limit for employer contributions to the pension scheme under section 80CCD has been increased from 10% to 14% of the employee’s salary. This change will benefit non-government employees in the new tax regime, allowing them a higher deduction.
Additional Tax Relief Measures
The Budget 2024 also introduces several other measures to ease the tax burden on individuals and businesses:
- Charity Tax Exemption Mergers: The existing tax exemption regimes for charities are merged for simplification.
- TDS Rate Reduction for E-commerce Operators: The TDS rate is reduced to 0.1% from the previous 1%.
- TCS Credit Against TDS on Salaries: Tax Collected at Source (TCS) credit will now be allowed against Tax Deducted at Source (TDS) on salaries.
Streamlining Tax Administration
To streamline tax administration and reduce litigation, the finance minister has announced the simplification of reopening and reassessment procedures. Standard operating procedures (SOPs) for TDS defaults have been rationalized, and compounding guidelines issued.
Special Tax Regime for Foreign Shipping Companies
A simpler tax regime has been introduced for foreign shipping companies operating domestic cruises in the country. Additionally, income generated from buybacks will now be taxed, and the penalty for non-reporting of movable assets valued at Rs 20 lakhs has been removed.
Withdrawal of Equalization Levy
In a move to align with international tax standards, the equalization levy, a tax on digital transactions, has been withdrawn.
These comprehensive reforms under Budget 2024 highlight the government’s commitment to making the tax system more efficient, equitable, and conducive to economic growth.
