India is all set to go into a new financial year on April 1, 2024. March 31, 2024, marks the end of the financial year 2023-24. As announced by Union Finance Minister Nirmala Sitharaman, the concept of new income tax rules will co-exist with the old income tax rule. Union Finance Minister Nirmala Sitharaman presented the interim Budget 2024 in the Parliament on February 1. This was the sixth budget presented by Sitharaman and the last one of Prime Minister Narendra Modi-led government's second term. As announced by Sitharaman, India's new income tax rules will come into effect from April 1, 2024. Now, the question arises what are India's new Income Tax rules? Below is everything you need to know-
What are the New Income Tax Rules?
- The New IT rules will be adopted by default. It aims to streamline tax filing procedures and promote greater participation in the new regime. However, taxpayers will still have the liberty to stick to the old tax regime if it is more beneficial to them.
- New Income Tax Slabs- Income from Rs 3 lakh and Rs 6 lakh will be taxed at 5%,
- Rs 6 lakh to 9 lakh will be taxed at 10%,
- Rs 9 lakh to 12 lakh will be taxed at 15%,
- Rs 12 lakh to 15 lakh will taxed 20%
- Rs 15 lakh and above will be taxed at 30%.
- Standard deduction of Rs50,000, which was previously applicable to the old tax regime, has now been incorporated into the new tax regime. This will further decrease taxable income under the new regime.
- The highest rate of surcharge of 37% on income above Rs 5 crore has been reduced to 25%.
- Maturity proceeds from life insurance policies, which are issued on or after April 1, 2023 where the total premium exceeds Rs 5 lakh, will be subject to taxation.
- The leave encashment tax exemption limit for non-government employees was Rs 3 lakh but it has now been increased to Rs 25 lakh.
What is the old IT rule?
The old tax regime taxed citizens-
- Less than Rs 2.5 lakh - Nil
- Rs 2.5 lakh to Rs 5 lakh - 5% (rebate applicable)
- Rs 5 lakh to Rs 7.5 lakh - 20%
- Rs 7.5 lakh to Rs 10 lakh - 20%
- Rs 10 lakh to Rs 12.5 lakh - 30%
- Rs 12.5 lakh to Rs 15 lakh - 30%
- Over Rs 15 lakh - 30%
It is pertinent to mention here that in 2020, the Central Government introduced a new tax regime for the subsequent financial year. (Now, this has changed after Budget 2023) The new tax regime and taxed citizens (It has changed after Budget 2023-24)
- Less than Rs 2.5 lakh - Nil
- Rs 2.5 lakh to Rs 5 lakh - 5% (rebate applicable)
- Rs 5 lakh to Rs 7.5 lakh - 10%
- Rs 7.5 lakh to Rs 10 lakh - 15%
- Rs 10 lakh to Rs 12.5 lakh - 20%
- Rs 12.5 lakh to Rs 15 lakh - 25%
- Over Rs 15 lakh - 30%