On Monday, the finance ministry clarified that there are no alterations in the new income tax regime for individuals for the ongoing fiscal year. Individual taxpayers retain the option to opt out of the regime when filing their ITR.
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The ministry issued a clarification on social media posts that claimed certain changes in the new tax regime effective April 1, stating, “We will not implement any new changes from 01.04.2024.” The ministry introduced a modified new income tax regime with significantly lower tax rates for individuals starting from the financial year commencing April 1, 2023.
The New Income Tax Regime
“The default tax regime is the new tax regime, yet taxpayers can select the tax regime (either old or new) that they deem advantageous,” stated the ministry. “The option to opt-out from the new tax regime remains available until filing the return for the Assessment Year 2024-25. However, various exemptions and deductions (apart from the standard deduction of ₹ 50,000 from salary and ₹ 15,000 from family pension) are not accessible, as in the old regime.”
Under the new I-T regime, individuals receive tax exemption on earnings up to ₹ 3 lakh. Income ranging from ₹ 3-6 lakh incurs a 5 percent tax, while the government applies a 10 percent tax to earnings between ₹ 6-9 lakh. Income falling within the brackets of ₹ 9-12 lakh and ₹ 12-15 lakh is taxed at 15 percent and 20 percent, respectively. Earnings exceeding ₹ 15 lakh are subject to a 30 percent I-T rate. The new tax regime, designated as “a default regime” from 2023-24, corresponds to the Assessment Year 2024-25. Taxpayers have the flexibility to modify this regime when filing their ITRs.
What did the Ministry Of Finance Say?
In a statement, the ministry clarified that eligible individuals without any business income have the option to select the tax regime for each financial year. They can opt for the new tax regime in one financial year and the old tax regime in another, and vice versa. The old tax regime, which remains in effect and provides numerous deductions and exemptions, grants tax exemption on income up to ₹ 2.5 lakh. Income ranging from ₹ 2.5-5 lakh incurs a 5 percent tax, while a 20 percent tax is applied to income between ₹ 5 lakh and ₹ 10 lakh. Income exceeding ₹ 10 lakh is subject to a 30 percent tax rate.
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