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Finance Ministry clarifies no new tax changes from April 1, 2024. Taxpayers can opt for old or new regime based on preferences
PremiumThe Finance Ministry has issued a clarification amidst the dissemination of misleading information on social media platforms regarding the new tax regime. It emphasizes that there are no new changes taking effect from April 1, 2024. Taxpayers have the flexibility to choose between the old and new tax regimes based on their preferences and financial circumstances, with the option to opt out of the new regime until filing their return for Assessment Year 2024-25. Eligible individuals without business income can alternate between the old and new regimes for each financial year.
Also Read | Income tax slabs FY 2024-25: Five tips to help taxpayers decide between old and new income tax regimes
On the social media platform, the Finance Ministry posted: "It has come to notice that misleading information related to the new income tax regime is being spread on some social media platforms. It is therefore clarified that:
1)There is no new change which is coming in from 01.04.2024.
2)The new tax regime under section 115BAC(1A) was introduced in the Finance Act 2023, as compared to the existing old regime (without exemptions) (SEE TABLE BELOW)
3)The new tax regime is applicable for persons other than companies and firms, is applicable as a default regime from the Financial Year 2023-24 and the Assessment Year corresponding to this is AY 2024-25.
4)Under the new tax regime, the tax rates are significantly lower, though the benefit of various exemptions and deductions (other than the standard deduction of Rs. 50,000 from salary and Rs. 15,000 from family pension) is not available, as in the old regime.
5)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.
6)The option for opting out from the new tax regime is available till the filing of return for the AY 2024-25. Eligible persons without any business income will have the option to choose the regime for each financial year. So, they can choose a new tax regime in one financial year and an old tax regime in another year and vice versa.
Income tax slabs as per the new tax regime are as follows
Income from ₹0 to ₹3,00,000: 0% tax rate
Income from ₹3,00,001 to ₹6,00,000: 5%
Income from ₹6,00,001 to ₹9,00,000: 10%
Income from ₹9,00,001 to ₹12,00,000: 15%
Income from ₹12,00,001 to ₹15,00,001: 20%
Income above ₹15,00,000: 30%
Old regime tax slabs
1) Income up to ₹2.5 is exempt from taxation under the old tax regime.
2) Income between ₹2.5 to ₹5 lakh is taxed at the rate of 5 per cent under the old tax regime.
3) Personal income from ₹5 lakh to ₹10 lakh is taxed at a rate of 20 per cent in the old regime
4) Under the old regime personal income above ₹10 lakh is taxed at a rate of 30 per cent.
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