Income Tax Rules Changes: There were major changes in the income tax rules in 2024, which will affect how you file your ITR in 2025. Are you also confused about how these changes affect you?
Income Tax Rules Changes: Due to the general elections in April-June 2024 this year, the government presented the Union Budget 2024 in July. Due to this, the changes in the income tax rules in 2024 happened in the middle of the year. Many taxpayers may have forgotten the changes in the Income Tax Law announced in July 2024. These changes will also affect the tax deductions and exemptions when filing Income Tax Return (ITR) in July 2025.
These changes include new rules from tax slabs to capital gains and TDS. These will affect how you plan, save and file your income tax return in 2025.
How will the changes in tax rules affect the salary in 2025? What effect will the changes in this year’s tax rules have on your salary depends on many things. Like whether you have any other income apart from salary. What investments do you make to save tax. Which tax system do you choose, old or new.
In this special story, we are telling you about the most important changes and the impact on your pocket.
New tax system: Now no tax on income up to Rs 3 lakh!
The government has made a big change in the new tax system. Now you can save more tax than before. In the new system, the income tax slabs have been changed. Earlier, in the new tax system, there was no tax on income up to Rs 2.5 lakh. But now this limit has been increased to Rs 3 lakh. That is, if you earn Rs 3 lakh or less in a year, then you will not have to pay any income tax.
5% tax will be levied on income between Rs 300,001 and Rs 700,000. Income between Rs 700,001 and Rs 10,00,000 will be taxed at 10%, while income between Rs 10,00,001 and Rs 12,00,000 will be taxed at 15%. Income between Rs 12,00,001 and Rs 15,00,000 will be taxed at 20%, while income above Rs 15,00,000 will be taxed at 30%.
| Income Tax Slab (in Rs) | Income Tax Rate |
| 0 – 300,000 | 0% |
| 3,00,001 – 7,00,000 | 5% |
| 7,00,001 – 10,00,000 | 10% |
| 10,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000Â | 20% |
| 15,00,001 and above | 30% |
The tax on your income has been reduced in the new tax system. If you choose the new system, you can save up to Rs 17,500 every year.
Standard deduction limit increased in new tax system
Standard deduction is a way to reduce your taxable income. Along with the change in income tax slab, the government has also increased the limit of standard deduction under the new tax system. If a person chooses the new tax system for the financial year 2024-25, then he can claim a standard deduction of Rs 75000, which was earlier Rs 50,000. Under the new tax system, the limit of standard deduction for family pensioners has also been increased from Rs 15,000 to Rs 25,000.
If a person chooses the old tax system for the financial year 2024-25, then there is no change in the limit of standard deduction. Under the old tax system, a person can claim a standard deduction of Rs 50,000 and Rs 15,000.
More deduction on NPS in the new tax system
If you work and invest in the National Pension System (NPS), then there is a good news for you. In the new tax system, you can claim more deduction on the contribution made by the company to NPS.
Earlier you could claim deduction of up to 10% of your basic salary. But now this limit has been increased to 14%. This deduction is claimed from your total income under section 80CCD (2). This reduces the taxable income and less tax has to be paid. That is, if your basic salary is Rs 1 lakh, then you can claim a deduction of up to Rs 14,000.
Getting more deduction in the new tax system will benefit those who choose this system. This will enable them to save more tax than before. But it is important to note that if the company’s total contribution in any financial year exceeds Rs 7.5 lakh in the Employees Provident Fund (EPF), NPS and Superannuation Fund, then you will have to pay tax on the company’s contribution. Apart from this, interest and returns received from additional contribution will also be taxed.
Why did the government not change the old tax system?
ABP News spoke to expert CA Manan Tehim on this. He said that in fact the government wants to gradually end the old tax system. Because earlier people were not so updated about mutual funds, PF etc. So to promote investment, provision of tax exemption was made on it. But, now most of the people have become aware about this and good accounts have also been opened. Therefore, now the government is focusing on the new tax system, in which exemption is not being given on investment.
Which tax system is better for common people?
On this, CA Manan Tahim says that if someone’s salary is less than Rs 10 lakh per annum, then the old tax system is beneficial for him. In the old system, there is a lot of tax exemption. Tax relief is available on income up to five lakhs. Apart from this, a good amount of exemption is also available on investment in mutual funds, PF. The new tax system is better only when you are earning Rs 10 lakh annually or more.
Changes in TDS rates: Relief for some, old rules for others
The government has made some changes to simplify the rates of TDS (Tax Deducted at Source) on different types of income. However, this change will apply only to some types of income. The government has not yet clarified on which income the TDS rates have changed.
Insurance commission: Earlier it was 5%, now it will be 2%
Rent: Earlier it was 5%, now it will be 2%
Payment from e-commerce: Earlier it was 1%, now it will be 0.1%
TDS means that some tax is deducted even before the full amount of income is received from a company. This tax is deposited to the government. Later, when you file your income tax return, you can adjust this deducted tax from your total tax.
TDS deducted from salary will now be less!
Now you can reduce the tax deducted from your salary. If you have any income other than your salary, like interest on money deposited in the bank or income from rent, then TDS is deducted on that too. Similarly, if you buy certain things, like a car or property, then TCS (Tax Collected at Source) is deducted on that too.
Now the government has made a rule that you can adjust the tax (TDS and TCS) deducted on these other incomes and expenses with the TDS deducted from your salary. This will reduce the tax deducted from your salary and you will get more money in your hand.
TCS Credit: Now parents will get relief!
A change has been made in the TCS rules that if you pay tuition fees for your children’s studies abroad, then now you will get some relief in tax. When you make certain types of expenses, like paying fees for studies abroad or buying a car worth more than Rs 50 lakh, then TCS is deducted on it.
Earlier, only the person from whom this tax was deducted could take credit of TCS. But now, the government has changed this rule. Now any other person can also take credit of TCS. This new rule will come into effect from January 1, 2025.
Change in the time limit for opening old ITR
The government has reduced the time limit for opening old income tax returns in certain cases. According to the new rule, if you have hidden your income and it is more than Rs 50 lakh, then the Income Tax Department can check your old ITR. Earlier this investigation could be done for up to 10 years, but now this time limit has been reduced to 5 years.
If you have filled your ITR correctly and shown all the income, then there is no need to worry. But if some income is hidden, then the Income Tax Department can check your old ITR and you may be fined or punished.
New rules of Capital Gains Tax: Know what has changed?
The government has also changed the rules of capital gains tax from the financial year 2024-25. If a person sells shares or mutual funds before a year and makes a profit on it, then it is called Short-Term Capital Gains (STCG). Earlier it was taxed at 15%, but now it has increased to 20%.
If a house, gold or any other thing is sold before a year and there is a profit on it, then the tax on it will be decided according to the total income. That is, you will have to pay tax according to the income tax slab you fall in.
There has been another big change in the rules of capital gains tax. Now all types of things on Long-Term Capital Gains (LTCG) will be taxed at the same rate. Also, the limit of tax exemption on shares and mutual funds has also been increased. Earlier there were different tax rates for different things on this. But now, all things will be taxed at the same rate of 12.5%.
If you make a profit by selling shares or mutual funds, then earlier there was no tax on profits up to Rs 1 lakh. But now this limit has been increased to Rs 1.25 lakh. That is, you can earn a profit of up to Rs 1.25 lakh every year without paying tax.
Tax on selling a house: Special exemption for some people!
If you bought a house before 23 July 2024 and now make a profit by selling it, then there is a special exemption. You can pay tax in one of the two ways. You can pay tax at the rate of 20%, but in this you will get the benefit of indexation. The second option is to pay tax at the rate of 12.5%, but in this you will not get the benefit of indexation.
Indexation means that you can increase your purchase price according to inflation, which reduces the profit and you have to pay less tax. If you have bought a house after 22 July 2024, then on selling it, you will have to pay tax at the rate of 12.5% ​​and will not get the benefit of indexation.
This exemption is only for those people who live in India and are Hindu Undivided Family (HUF). If you do not live in India or fall into any other category, then you will have to pay tax at the rate of 12.5% ​​without indexation.
Aadhaar is now necessary for income tax return and PAN card!
If you want to file income tax return or apply for PAN card, then you must have an Aadhaar card. Earlier, if you did not have an Aadhaar card, you could use the Aadhaar enrollment number. But now this will not happen.
From October 1, 2024, you cannot use the Aadhaar enrollment number while applying for ITR or PAN card. It is necessary to have an Aadhaar card. This change has been made so that all taxpayers can be identified correctly and there is no confusion.
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