In a recent update, it has been confirmed that there will be no changes in the income tax regime starting April 1, 2024. The new tax regime introduced under section 115BAC(1A) in the Finance Act 2023 will continue to offer significantly lower tax rates for individuals, excluding companies and firms.
New Regime 115BAC (1A) introduced for FY 2023-24 |
Existing old Regime | |||
| 1. | 0-3 lacs | 0% | 0-2.5 lacs | 0% |
| 2. | 3-6 lacs | 5% | 2.5 -5 lacs | 5% |
| 3. | 6-9 lacs | 10% | 5-10 lacs | 20% |
| 4. | 9-12 lacs | 15% | Above 10 lacs | 30% |
| 5. | 12-15 lacs | 20% | ||
| 6. | Above 15 lacs | 30% | ||
This regime is applicable for persons other than companies and firms, as a default regime from the financial year 2023-24 and the assessment year corresponding to this is AY 2024-25.
Key Points of the Regime:
- Under the new regime applicable for the FY 2023-24, individuals can benefit from lower tax rates ranging from 0% to 30%.
- The existing old regime, without exemptions, had tax rates ranging from 0% to 30%.
- Taxpayers should note that various exemptions and deductions, except for the standard deduction of Rs. 50,000 from salary and Rs. 15,000 from family pension, are not available in the new regime.
- The new tax regime is the default for individuals (excluding companies and firms) from the financial year 2023-24 onwards, with the corresponding assessment year being AY 2024-25.
- However, taxpayers have the option to choose the tax regime they find more beneficial. This option to opt out of the new tax regime is available until filing the return for AY 2024-25.
- Individuals without business income can choose the regime for each financial year. This means they can opt for the new tax regime in one financial year and the old tax regime in another.
The continuation of the existing tax regime from April 1, 2024, means taxpayers will still have the flexibility to select the regime that suits them best. Whether opting for the lower tax rates of the new regime or sticking with the old regime with available exemptions, individuals can make informed decisions based on their financial circumstances.
With no changes to the income tax regime from April 1, 2024, taxpayers have been encouraged to assess their options carefully before filing their returns for the AY 2024-25. The choice between the new and old tax regimes offers flexibility and the opportunity to maximize tax savings based on individual situations.
