Income Tax Changes to Effect You in 2024

In the Union Budget 2023, the government introduced a new set of Income Tax laws. The selection of the New Income Tax Regime as the default tax structure was one of the most important rules in personal taxes.

During her Budget speech, Union Finance Minister Nirmala Sitharaman emphasised that the new income tax regime’s proposals aim to empower individuals by allowing them to keep more of their earnings.

Instead of relying on government incentives or disincentives, the approach passes responsibility to taxpayers, empowering individuals to choose where to invest their money.

Below are the Changes which will take place in 2024:

Revised Tax Slab

Adjustments were made to the income tax slabs within this framework to make the new tax regime more appealing.

Following are new income tax slabs:-

1. No tax on income up to Rs.3 Lakh.

2. A Tax rate of 5% is applicable on income between Rs. 3 Lakh. and Rs. 6 Lakh.

3. A tax rate of 10% is applicable on income between Rs. 6 Lakh. and Rs. 9 Lakh.

4. A Tax rate of 15% is applicable on income between Rs. 9 Lakh. and Rs. 12 Lakh.

4. A tax rate of 20% is applicable on income between Rs. 12 Lakh. and Rs. 15 Lakh.

4. A Tax rate of 30% is applicable on income exceeding Rs. 15 Lakh.

New Tax Regime becomes default Tax Regime

The new tax regime has been deemed as the default regime. That is, when you file an ITR, the new tax regime will be displayed by default. If you want to use the old tax system, you must do so manually.

Limit of Tax Exemption in New Tax Regime

In the new tax regime, the tax exemption limit has been raised. People who switch to the new tax system would receive tax exemption on income up to Rs.3 lakh, up from Rs.2.5 lakh previously. This means that an additional Rs.50,000 in tax exemption will be available beginning this year.

Increment in Tax Rebate

The rebate limit has been raised from Rs.12,500 to Rs.25,000 under Section 87A of the Income Tax Act if the Taxpayer opts for the New Tax Regime.

Standard Deduction of Rs.50 thousand in Income Tax

Until last year, employees and pensioners paying income tax received tax deductions of Rs. 50 thousand only under the old tax structure. Employees and pensioners who chose the new tax regime would receive a standard deduction of Rs. 50 thousand beginning this year.