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Tag: New Tax Regime

  • Budget 2024: Rebate Under Section 87A Decreases By Rs 5K As Tax Structure Under New Tax Regime Revised — Understanding The Math | Personal Finance News

    New Delhi: Finance Minister Nirmala Sitharaman, presenting the Budget 2024 in Parliament made two significant announcements for the employed people to make for those opting for the New Tax Regime. First, the standard deduction for salaried employees is proposed to be increased from Rs 50,000 to Rs 75,000. Similarly, deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000. Secondly the FM announced a revised tax structure under the New Tax Regime.

    What is the new tax slab under the New Tax Regime?

    There will be zero tax on income between Rs 0 to Rs 3 lakh, under the new tax regime. There will be a 5 percent tax on income between Rs 3 to 7 lakh, 10 percent tax on income between Rs 7 to 10 lakh, 15 percent on income between Rs 10 to 12 lakh, 20 percent on income between Rs 12 to 15 lakh and 30 percent tax on income above Rs 15 lakh.

    Which tax slab was in place earlier?

    Till now, under the new tax regime, income between Rs 0 to Rs 3 lakh was tax-free. There was a 5 percent tax on income between Rs 3 to 6 lakh, 10 percent on income between Rs 6 to 9 lakh, 15 percent on income between Rs 9 to 12 lakh, 20 percent on income between Rs 12 to 15 lakh, and 30 percent tax on income above Rs 15 lakh.

    Understanding how the rebate has been reduced by Rs 5000

    You used to receive a tax refund of Rs 25,000 under Section 87A of the new tax regime if your total taxable income was less than Rs 7 lakh. There was no tax on your salary till Rs 0-3 lakh. The tax at a 5 percent rate was Rs 15,000 on a salary of Rs 3-6 lakh. On the other hand, the tax at the 10 percent rate was Rs 10,000 on a salary of Rs 6-7 lakh. In this way, you would get a full rebate of Rs 25,000.

    Now after the change in the tax slab, your salary up to Rs 3 lakh becomes tax-free. You have a tax liability of Rs 20,000 at the rate of 5% on the slab of Rs 3-7 lakh, on which you would receive a refund under Section 87A. This indicates that the rebate, which was previously Rs. 25,000, is now Rs. 20,000. Thus, the refund you receive under section 87A has decreased due to the change in tax slab.

    Will there be any losses for you?

    You may be wondering if you would lose out because the change in tax slab will result in a smaller refund. The response is negative. If your taxable income was up to Rs. 7 lakh earlier you would receive a refund of Rs. 25,000; going forward, you will receive a refund of Rs. 20,000. Your salary up to Rs 7 lakh would be tax-free in any case.

    Who stands to gain?

    Those whose taxable income exceeds Rs 7 lakh will profit from the change in the tax slab. Those whose income exceeds Rs 7 lakh will not be eligible for the 87A rebate. Previously, individuals in this category had to pay a tax of Rs. 25,000 on income up to Rs. 7 lakh. However, now, they will only be required to pay a tax of Rs. 20,000.

  • New Tax Rules From April 1: Did You Know About Basic Exemption Limit? Check Here | Personal Finance News

    New Delhi: April 1, 2024, marks the beginning of a new financial year, bringing with it changes to income tax rules as announced by Finance Minister Nirmala Sitharaman during her Budget speech earlier this year in February. What are the changes that are taking place from the kick start of the new financial year?

    This is the question that may be making rounds in your minds. If so, here’s a breakdown of the key changes taking effect from April 1, 2024. (Also Read: Mutual Fund Investors ALERT! One Needs To Do THIS By March 31 To Avoid Transaction Blocks)

    New Tax Regime

    From April 1, 2024, onwards, there will be a default adoption of the new tax regime. This move is aimed at simplifying the tax filing process and encouraging more individuals to opt for this regime. (Also Read: Agency Banks To Open This Sunday: Check What It Is, How They Operate & Full List)

    However, taxpayers retain the option to stick to the old tax regime if it proves more beneficial for them.

    Tax Slabs

    Under the new tax regime, the tax slabs are mentioned below:

    – If your income is from Rs 3 lakh to Rs 6 lakh, then you will be taxed at 5 percent.

    – If anyone generates income from Rs 6 lakh to Rs 9 lakh in a particular financial year, they have to pay 10 percent tax.

    – If your earnings are between Rs 9 lakh and Rs 12 lakh, you will be entitled to pay 15 percent tax.

    – You will be entitled to pay 20 percent tax on the income from Rs 12 lakh to Rs 15 lakh. 

    – Income of Rs 15 lakh and above will be taxed at 30 percent.

    Standard Deduction Under New Tax Regime

    The standard deduction of Rs 50,000, previously applicable only to the old tax regime, has now been incorporated into the new tax regime. This adjustment will effectively reduce taxable income under the new regime.

    Reduction In Surcharge Rate Under New Tax Regime

    The highest rate of surcharge, previously at 37 percent on income above 5 crore, has now been reduced to 25 percent. 

    Taxation On Maturity Proceeds From Life Insurance Policies

    From April 1, 2023, maturity proceeds from life insurance policies issued where the total premium exceeds Rs 5 lakh will be subject to taxation. 

    Increase In Leave Encashment Tax Exemption Limit

    The tax exemption limit for leave encashment for non-government employees has been increased from Rs 3 lakh to Rs 25 lakh.