The Ministry of Finance, in a clarification issued today, said there would not be any new change in the tax regime from April 1, 2024. The clarification comes amid misleading information being spread on social media regarding the new tax regime.
The finance ministry says there is "no new change", which is coming in from April 1, 2024. The new tax regime is applicable for persons other than companies and firms and will be applicable as a "default regime" from the financial year 2023-24 and the assessment year AY 2024-25, it said.
Under the new tax regime, the tax rates are “significantly lower”, says the FinMin. However, the benefit of various exemptions and deductions -- other than the standard deduction of ₹50,000 from salary and ₹15,000 from family pension -- is not available like in the old regime.
The government has also clarified the new tax regime is the "default tax regime", however, taxpayers can choose the tax regime (old or new) that they think is beneficial to them.
Option for opting out from the new tax regime is available till filing of return for the AY 2024-25. The eligible persons without any business income can choose the regime for each financial year. "So, they can choose new tax regime in one financial year and old tax regime in another year and vice versa," says the ministry.
Notably, according to the new tax regime, there are six income slabs. There is no tax on those earning between 0-3 lakh, while 5% tax on income in the range of ₹3-6 lakh. The ₹6-9 lakh income group has to pay 10% tax while the ₹12-15 lakh group bears 20% income tax. Anyone earning more than ₹15 lakh per year has to pay 30% income tax.
In the existing old regime, there are four income slabs -- 0%, 5%, 20% and 30%. The 30% income tax slab is applicable on income above ₹10 lakh.
The new tax regime offers benefits like hassle-free tax planning, increased basic exemption limit, surcharge cut, and increase in rebate limit. Now individuals don't need to track their travel and rent tickets. The increase in the basic exemption limit offers relief to many people as the basic exemption limit has increased to ₹3 lakh under the new regime. The government has also mandated a 25% tax on people whose income exceeds ₹5 crore from 37% earlier. Additionally, the government has increased the rebate limit to ₹25,000 on income up to ₹7 lakh.
Central Board of Direct Taxation (CBDT) Chairman Nitin Gupta, speaking to Fortune India in February, had said that 95% of the tax filing processes are now digital. “Processing is fully digital, and scrutiny assessment or audit is also completely faceless. Penalties and appeals too are faceless,” Gupta says.
Finance Minister Nirmala Sitharaman's Interim Budget 2024 had not introduced any changes in the income tax slabs for the upcoming financial year 2024-25, except for withdrawing outstanding tax demand up to FY15 for amounts less than ₹10,000.
