While Budget 2024 does not change personal income tax, the old and new income tax systems will remain in place. However, some rules have been changed.
Individuals have the right to switch between the old and new income tax systems. However, the Income Tax Department has imposed restrictions on the number of times a person can switch between the two systems. The switch is allowed based on the individual's income tax slab.
It is clear that there is no new change coming in from 01.04.2024 (today), and the new tax regime under section 115BAC(1A) was introduced in the Finance Act 2023, as compared to the existing old regime (without exemptions)
Please make sure to download and fill out Form 10IE if you want to switch to the new income tax system. Remember to submit Form 10IE before July 31 to choose the new Tax regime. Individuals currently using the old income tax system have the option to change to the new one.
Similarly, those using the new system can switch to the old one using the same method. However, please note that you can only switch from the new system to the old system once.
Here are the changes that will take effect from today:
- The standard deduction of ₹50,000, which was earlier only for the old tax system, will be implemented for the new income tax from today.
- A surge charge of up to 37% will be charged on those earning more than Rs 3.5 crore. It has been reduced to 25%. This will reduce the effective tax rate for individuals with high incomes who opt for the new regime.
- Effective April 1, 2023, maturity proceeds from life insurance policies issued where the total premium exceeds Rs 5 lakh will be subject to taxation.
- The leave income tax exemption limit for non-government employees has been increased to ₹25 lakh from today, which was ₹3 lakh.
New Tax Slabs
The revised tax slabs under the new tax regime are as follows:
- Income between ₹3 lakh and ₹6 lakh: Taxed at 5%
- Income between ₹6 lakh and ₹9 lakh: Taxed at 10%
- Income between ₹9 lakh and ₹12 lakh: Taxed at 15%
- Income between ₹12 lakh and ₹15 lakh: Taxed at 20%
- Income above ₹15 lakh: Taxed at 30%
Based on the changes made in 2023, the personal income tax - tax rebate has been fixed up to Rs 7 lakh for those in the new income tax bracket. Nothing has changed this year. At the same time, the central government did not make any changes in the old income tax system last year or this year.
