Amidst speculations, the Finance Ministry has clarified that there will be no new changes in the tax regime from April 1, 2024, as the interim budget’s income tax proposals take effect. In a statement posted on X (formerly Twitter), the ministry addressed confusion surrounding the new tax regime, known for its lower rates but fewer exemptions and deductions.
Interim budget highlights by Nirmala Sitharaman
During the presentation of the interim budget on February 1, 2024, Union Finance Minister Nirmala Sitharaman assured that there would be no alterations to taxation, proposing to maintain existing direct and indirect tax rates.
Key points from Finance Ministry
- Responding to misinformation circulating on social media platforms, the Finance Ministry shared six important points for the financial year regarding taxes:
- No new change: There will be no new change as of April 1, 2024.
- Introduction of new tax regime: The new tax regime under Section 115BAC(1A) was introduced in the Finance Act 2023, differing from the existing old regime.
- Applicability: The new tax regime is applicable for individuals other than companies and firms as the default regime from the Financial Year 2023–24, with the corresponding Assessment Year being AY 2024–25.
- Lower tax rates: While the new tax regime offers significantly lower tax rates, it does not provide the benefit of various exemptions and deductions available in the old regime.
- Option for taxpayers: Taxpayers can choose between the old and new tax regimes based on what they find beneficial.
- Opt-out option: Taxpayers have the option to opt out of the new tax regime until filing their returns for AY 2024–25. Eligible individuals without business income can select the regime for each financial year as per their preference.
Interim budget tax slabs
As per the interim budget, the income tax slabs remain unchanged for the new financial year (FY2024–25). Income ranging from Rs. zero to Rs. 3,00,000 will be exempt from tax, with subsequent slabs taxed at 5%, 10%, 15%, 20%, and 30%, respectively.
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