Income Tax Rule Changes in 2024:Major changes have been made in many rules related to income tax during 2024, which can affect your tax liability while filing ITR i.e. income tax return in 2025. These changes include changes made in the rules related to tax slab, standard deduction, capital gains tax and TDS. Before the year 2024 ends, let us take a look at these important changes and their impacts.
1. New tax slabs implemented
The government has announced new tax slabs for the financial year 2024-25, which will enable more tax to be saved under the new tax regime. These are the new tax slabs:
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Rs 0-3,00,000: 0%
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Rs 3,00,001-7,00,000: 5%
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Rs 7,00,001-10,00,000: 10%
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Rs 10,00,001-12,00,000: 15%
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Rs 12,00,001-15,00,000: 20%
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Above Rs 15,00,001: 30%
Under the new tax slab, a taxpayer can save additional up to Rs 17,500.
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2. Increase in standard deduction limit
With the new tax slab, the standard deduction limit has also been increased.
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For General Employees: Rs 50,000 to Rs 75,000
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For those receiving family pension: Rs 15,000 to Rs 25,000
Salaried and pensioner taxpayers may benefit more under the new tax regime due to increase in standard deduction.
3. Higher deduction on employer contribution in NPS
The deduction limit on employer’s contribution to the National Pension System (NPS) has been increased from 10% to 14%. This benefit is available only under the new tax regime. This will increase tax saving under the new tax regime. However, if the total contribution to EPF, NPS and superannuation fund exceeds Rs 7.5 lakh, then this excess amount will be taxable.
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4. Changes in capital gains tax rules
New rules have been implemented to simplify taxation on capital gains:
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Tax on Short-Term Capital Gains (STCG) 20%
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Tax on Long-Term Capital Gains (LTCG) 12.5%
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No tax on equity-linked LTCG profits up to Rs 1.25 lakh in a financial year.
Due to the new rules, tax calculation on capital gains will become easier. However, tax liability may increase for some investors.
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5. Change in holding period
The holding period is divided into two categories to determine the type of capital gains. This period has been kept at 12 months for listed assets and 24 months for non-listed assets. After these changes, taxpayers will also have to keep tax savings in mind while deciding to sell assets.
6. Simplifying TDS rate
TDS rates have been simplified for certain sources of income. This will reduce deductions and taxpayers will benefit. However, there is no change in TDS on salaries, virtual digital assets, lotteries, racing, transfer of immovable property, contracts and payments made to non-residents.
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7. Claiming TDS/TCS credit on other income
Salaried employees can now adjust the credit of TDS/TCS deducted on other income from TDS deducted on their salary. This will help salaried people to manage their cash flow.
8. New tax rule on share buyback
The amount received on share buyback will now be taxable in the hands of individual taxpayers as per their income tax slab. Due to this, the tax liability of taxpayers falling in higher tax slabs may increase, while those in lower slabs will benefit.
9. TCS on Notified Luxury Goods
TCS (Tax collected at source) will be applicable on the purchase of notified luxury goods worth more than Rs 10 lakh. This may increase the cost of these things. This new rule is going to come into effect from January 1, 2025. However, the government has not yet released the list of luxury goods nor has it been made clear as to how TCS collection will be done.
10. Vivad Se Vishwas Scheme 2.0
The government has launched the Vivad Se Vishwas Scheme 2.0, which will help in resolving disputes between taxpayers and the Income Tax Department. This scheme will give an opportunity to resolve pending cases.
All these changes in 2024 can impact your ITR filing in 2025. Keeping these changes in mind, it is very important to plan on time, so that you can manage your income tax liability properly.
