Income Tax - Taxpayers should know these key changes from the last 6 months
The presentation of the Budget 2025 is planned for february 1, 2025, next week. Because 2024 was an election year, two budgets were presented: a complete budget in July and an interim budget in February.
During the first term of the Modi 3.0 government, the previous budget in July 2024 brought adjustments under the new tax system, such as an increase in the standard deduction and updated tax slabs. With expectations for further taxpayer-friendly measures including possible changes to capital gains tax, income tax slabs, and perks for salaried workers, the 2018 budget is eagerly awaited.
The most recent budget announced several significant adjustments for taxpayers under the new tax framework.
During the first term of the Modi 3.0 government, the previous budget in July 2024 brought adjustments under the new tax system, such as an increase in the standard deduction and updated tax slabs. With expectations for further taxpayer-friendly measures including possible changes to capital gains tax, income tax slabs, and perks for salaried workers, the 2018 budget is eagerly awaited.
The most recent budget announced several significant adjustments for taxpayers under the new tax framework.
1. Updated Tax Slabs under New Tax Regime
The tax brackets have been revised in the latest tax structure to provide taxpayers with greater financial relief.
Income between Rs 0-3 lakh: 0% tax
Income between Rs 3-6 lakh: 5%
Income between Rs 6-9 lakh: 10%
Income between Rs 9-12 lakh: 15%
Income between Rs 12-15 lakh: 20%
Income of Rs 15 lakh and above: 30%
These revised slabs aim to assist middle-income earners in potentially saving up to Rs 17,500.
The tax brackets have been revised in the latest tax structure to provide taxpayers with greater financial relief.
Income between Rs 0-3 lakh: 0% tax
Income between Rs 3-6 lakh: 5%
Income between Rs 6-9 lakh: 10%
Income between Rs 9-12 lakh: 15%
Income between Rs 12-15 lakh: 20%
Income of Rs 15 lakh and above: 30%
These revised slabs aim to assist middle-income earners in potentially saving up to Rs 17,500.
2. Standard Deduction Increase for New Tax Regime
The standard deduction ceiling is now Rs 75,000 instead of Rs 50,000.
Furthermore, family pensioners now have a higher maximum of Rs 25,000 instead of Rs 15,000.
Both working people and pensioners will benefit from this modification in terms of their taxes.
3. Increase in deduction limit for NPS contributions under New Tax Regime
The 10% deduction cap for an employer's National Pension System (NPS) contribution has been increased to 14%. It is anticipated that this change would motivate workers to save more for retirement.Furthermore, family pensioners now have a higher maximum of Rs 25,000 instead of Rs 15,000.
Both working people and pensioners will benefit from this modification in terms of their taxes.
3. Increase in deduction limit for NPS contributions under New Tax Regime
4. Revisions to capital Gains Tax
The long-term capital gains (LTCG) tax rate was raised from 10% to 12.5%, while the short-term capital gains (STCG) tax rate was raised from 15% to 20%. Furthermore, the Rs 1.25 lakh LTCG exemption ceiling for equity investments has been increased from Rs 1 lakh. The goal of these changes is to encourage investors to concentrate on long-term investments.
5. Introduction of tcs on Luxury Goods
As of january 1, 2025, luxury items priced at more than Rs 10 lakh are subject to Tax Collection at Source (TCS). The goal of this legislation is to prevent tax evasion and improve oversight of high-value transactions.