For FY 2024-25, the Indian government has introduced some updates to the new tax regime. The basic structure of the new tax regime remains the same, with lower tax rates, but there are some key changes and benefits to note. Here’s how you can explain it in your blog:
Tax Slabs under the New Tax Regime for FY 2024-25
The new tax regime for FY 2024-25 provides the following tax slabs:
| Income Range | Tax Rate |
| Up to ₹3 lakh | Nil |
| ₹3,00,001 to ₹7 lakh | 5% |
| ₹7,00,001 to ₹10 lakh | 10% |
| ₹10,00,001 to ₹12 lakh | 15% |
| ₹12,00,001 to ₹15 lakh | 20% |
| Above ₹15 lakh | 30% |
Key Changes and Tax Benefits for FY 2024-25
The significant change in the new tax regime for FY 2024-25 is the increase in the basic exemption limit, which is now ₹3 lakh instead of ₹2.5 lakh (the limit for previous years). This means individuals earning up to ₹3 lakh will not pay any income tax in FY 2024-25.
Here are the key tax benefits and changes:
1. Tax Rebate Under Section 87A
- Rebate available for incomes up to ₹7 lakh: For FY 2024-25, individuals with taxable income up to ₹7 lakh will be eligible for a full tax rebate under Section 87A. This means their net tax liability will be zero, which is an increase from the previous ₹5 lakh limit.
- Rebate amount: The maximum rebate is ₹25,000 for taxpayers earning up to ₹7 lakh.
2.No Capital Gains Exemptions
- Capital gains exemptions such as Section 54 and Section 54F for long-term capital gains on the sale of property are not available under the new tax regime.
3. Simplified Tax Calculation
- The new tax regime simplifies tax filing as taxpayers are no longer required to keep track of multiple exemptions and deductions.
- The reduced number of tax slabs makes it easier to calculate taxes, especially for individuals who have limited deductions.
Key Difference Between the Old and New Tax Regimes
| Feature | Old Tax Regime | New Tax Regime |
| Tax Rates | Higher | Lower |
| Exemptions & Deductions | Available | A Few Available |
| Standard Deduction | ₹50,000 | ₹75,000 |
| Investment Benefits | Allowed | Limited |
1.Optimize Salary Structure with Employer Benefits
Restructuring your salary package to include non-taxable benefits can significantly lower your taxable income. Some effective strategies include:
- Employer’s Contribution to NPS (Section 80CCD(2)): Contributions made by your employer up to 10% of your basic salary are tax-free. This can help reduce your overall taxable income.
- Food Coupons/Vouchers: Employees can benefit from tax-free meal vouchers, which are exempt up to ₹50 per meal. This is a simple way to lower taxable income while enjoying a meal at work.
- Company-Leased Accommodation: Although HRA (House Rent Allowance) exemptions are not available under the new tax regime, structured rent reimbursements via company-leased accommodation can still help reduce taxable income.
2. Claim the Increased Standard Deduction
Under the new tax regime, salaried individuals and pensioners can avail of a ₹75,000 standard deduction, which is automatically deducted from their taxable income. This deduction does not require any specific investment and reduces your overall tax liability.
3. Leverage National Pension System (NPS) Benefits
Even though most tax deductions are not available under the new tax regime, the National Pension System (NPS) remains an exception. Here’s how it can benefit you:
- Employer Contribution (Section 80CCD(2)): Your employer’s contribution to your NPS, up to 10% of your basic salary, is tax-free.
- Additional Self-Contribution (Section 80CCD(1B)): If you make voluntary contributions to your NPS, you can claim an additional deduction of ₹50,000, helping further reduce your taxable income.
4. Utilize Business Deductions Under Section 80JJAA
If you are a business owner, you can take advantage of Section 80JJAA, which offers businesses an additional 30% deduction on salaries paid to newly hired employees for up to three consecutive years. This can significantly reduce taxable profits for your business while encouraging new job creation.
5. Tax Benefits for Senior Citizens
Senior citizens can avail themselves of special tax benefits, especially concerning interest income:
- Section 80TTB: Senior citizens can claim an exemption of up to ₹50,000 on interest income earned from savings accounts, fixed deposits, and post office schemes.
- No Advance Tax Requirement: Senior citizens whose income is solely derived from pension and interest are exempt from paying advance tax, making their tax filing process easier and more convenient.
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