New Financial Year Ushers in Key Tax Changes from April 1, 2024
As the calendar turns to April 1, marking the beginning of the new financial year, significant changes in the income tax rules announced by Union Finance Minister Nirmala Sitharaman in February’s Budget speech are set to take effect. Among the notable shifts aimed at simplifying the tax filing process and encouraging participation, the default adoption of the new tax regime stands out. Taxpayers, however, retain the option to choose the old regime if they find it more favorable.
The revised tax slabs under the new regime will see incomes between ₹3 lakh and ₹6 lakh taxed at 5%, ₹6 lakh to ₹9 lakh at 10%, ₹9 lakh to ₹12 lakh at 15%, ₹12 lakh to ₹15 lakh at 20%, and incomes over ₹15 lakh at 30%. Enhancements include the integration of a standard deduction of ₹50,000 into the new regime, potentially reducing taxable income for many. Additionally, the maximum surcharge rate for incomes exceeding ₹5 crore has been lowered from 37% to 25%, offering relief to higher earners.
Further modifications address specific concerns such as the taxation of maturity proceeds from life insurance policies issued from April 1, 2023, where the annual premium exceeds ₹5 lakh, and the increase in the leave encashment tax exemption limit for non-government employees from ₹3 lakh to ₹25 lakh. These adjustments underscore the government’s effort to streamline tax practices while balancing the needs of various taxpayer groups.
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