Income Tax Changes in 2024: Major changes have been made in many rules related to income tax during 2024, which can affect your tax liability at the time of 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 effects.
1. New tax slabs implemented
The new tax regime has introduced revised income tax slabs designed to benefit individual taxpayers. Under the updated structure, income up to INR 3,00,000 is exempt from tax, while earnings between INR 3,00,001 and INR 7,00,000 are taxed at 5%. Income from INR 7,00,001 to INR 10,00,000 is taxed at 10%, and the next bracket, INR 10,00,001 to INR 12,00,000, is taxed at 15%. For earnings between INR 12,00,001 and INR 15,00,000, the tax rate is 20%, and any income above INR 15,00,000 is taxed at 30%.
Under the new tax slabs, a taxpayer can save up to INR 17,500 extra.
2. Increase in standard deduction limit
The limit of standard deduction has also been increased with the new tax slab.
For general employees: INR 50,000 to INR 75,000
For family pensioners: INR 15,000 to INR 25,000
Due to the increase in standard deduction, salaried and pensioner taxpayers can get more benefits under the new tax regime.
3. Higher deduction on employer contribution to NPS
The deduction limit on employer 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 savings under the new tax regime. However, if the total contribution to EPF, NPS and superannuation funds exceeds INR 7.5 lakh, then this additional amount will be taxable.
4. Changes in capital gains tax rules
New rules have been implemented to simplify taxation on capital gains:
Tax on short-term capital gains (STCG) 20%
Tax on long-term capital gains (LTCG) 12.5%
No tax on equity-related LTCG profits up to INR 1.25 lakh in a financial year.
The new rules will make tax calculation on capital gains easier. However, tax liability may increase for some investors.
5. Changes in holding period
The holding period has been 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.
Also Read: How to Easily File Your 2024 Income Tax Returns with Multiple Income Sources
6. Simplifying TDS rates
TDS rates have been simplified for certain sources of income. This will reduce deductions and benefit taxpayers. However, there is no change in TDS on salaries, virtual digital assets, lotteries, racing, and transfer of immovable property, contracts and payments made to non-residents.
7. Claiming TDS/TCS credit on other income
Salaried employees can now adjust the credit of TDS/TCS deducted on other income with the TDS deducted on their salary. This will help salaried people 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 personal 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 INR 10 lakh. This may increase the cost of these things. This new rule is going to be implemented from January 1, 2025. However, the government has not yet released the list of luxury goods nor has it been clarified how TCS collection will be done.
10. Dispute to Vishwas Scheme 2.0
The government has launched Dispute to 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 may affect 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.