New Tax Rules Effective From April 1: Here's Everything You Need To Know From Key Changes To Revised Tax Slabs

New Tax Rules Effective From April 1: Here's Everything You Need To Know From Key Changes To Revised Tax Slabs

Income between Rs 6 lakh to Rs 9 lakh will face a tax rate of 10 per cent

Oliviya KunjumonUpdated: Saturday, March 30, 2024, 12:30 PM IST
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New Tax Rules Effective April 1 | Image Source: Wikipedia (Representative)

With the conclusion of the fiscal year 2024 on March 31st and the dawn of FY 2025 on Monday, April 1, significant changes in tax regulations are set to take effect as announced in Finance Minister Nirmala Sitharaman's Budget speech earlier this year on February 1.

Here's a breakdown of the key updates

Taxpayers will now default to the new tax regime unless they choose otherwise. This move seeks to streamline the filing procedure while allowing taxpayers the flexibility to opt for the old regime if it proves more advantageous for them.

Revised Tax Slabs

The tax slabs have been revised to accommodate different income brackets. Here's how the new tax rates will apply:

1. Income ranging from Rs 3 lakh to Rs 6 lakh will be taxed at 5 per cent.

2. Income between Rs 6 lakh to Rs 9 lakh will face a tax rate of 10 per cent.

3. Earnings from Rs 9 lakh to Rs 12 lakh will be taxed at 15 per cent.

4. Individuals with income between Rs 12 lakh to Rs 15 lakh will incur a tax rate of 20 per cent.

5. Income exceeding Rs 15 lakh will be taxed at 30 per cent.

Incorporation of Standard Deduction

The standard deduction of Rs 50,000, previously applicable only under the old tax regime, has now been included in the new tax structure. This inclusion aims to reduce taxable income under the new regime, benefiting taxpayers.

Reduction in Surcharge Rates

The highest surcharge rate, previously set at 37 per cent for income exceeding Rs 5 crore, has been reduced to 25 per cent. This adjustment is expected to alleviate the tax burden on high-income earners.

Taxation on Maturity Proceeds

Maturity proceeds from life insurance policies issued on or after April 1, 2023, where the total premium surpasses Rs 5 lakh, will now be subject to taxation.

Revised Leave Encashment Tax Exemption Limit

For non-government employees, the tax exemption limit on leave encashment has been substantially increased from Rs 3 lakh to Rs 25 lakh.

As the new tax rules come into effect from April 1, taxpayers should familiarise themselves with these changes to ensure compliance and maximize benefits.

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