The Finance Ministry said there is no change in the new income tax regime for individuals for the current fiscal year and individual taxpayers can opt out of the regime at the time of filing their income tax return (ITR).
Clarifying on social media posts claiming certain changes in the new tax regime effective April 1, the Ministry said, “There is no new change which is coming in from 01.04.2024.”
A modified new income tax regime was rolled out from the financial year beginning April 1, 2023, for individuals under which the tax rates are “significantly lower”. However, the benefit of various exemptions and deductions (other than the standard deduction of ₹50,000 from salary and ₹15,000 from family pension) is not available, as in the old regime.
“New tax regime is the default tax regime. However, taxpayers can choose the tax regime (old or new) that they think is beneficial to them…Option for opting out from the new tax regime is available till filing of return for the AY 2024-25,” the Ministry said.
Under the new I-T regime, income of up to ₹3 lakh is exempt from tax. A 5% tax is levied on income between ₹3-6 lakh, 10% for income between ₹6-9 lakh. Income between ₹9-12 lakh and ₹12-15 lakh is subject to 15% and 20% tax, respectively. A 30% tax would be applicable on income above ₹15 lakh.
The new tax regime was set as “a default regime” from 2023-24 and the Assessment Year corresponding to this is AY 2024-25. This can be changed by the taxpayer at the time of filing the ITR. Eligible persons without any business income will have the option to choose the regime for each financial year. So, they can choose the new tax regime in one financial year and the old tax regime in another year and vice-versa, the Ministry said in a statement.
The old tax regime which is still in force and offers a host of deductions and exemptions, exempts income up to Rs 2.5 lakh from taxes. Income from ₹2.5-5 lakh attracts 5% tax, and 20% for income between ₹5 lakh and ₹10 lakh. A 30% is levied on income above ₹10 lakh.
