Starting October 2024, Aadhaar is be mandatory for filing Income Tax Returns and applying for PAN. Individuals without Aadhaar may face challenges in completing these processes, as Aadhaar enrolment numbers will no longer be accepted.
The year 2024 introduced transformative changes to India’s income tax laws, significantly impacting how taxpayers will file their Income Tax Returns (ITRs) for FY 2024-25. With major reforms ranging from revised tax slabs to updated rules for capital gains and TDS, it’s essential to understand how these changes will affect your financial planning and tax filing in 2025. Here’s a concise breakdown of the top 10 income tax updates for 2024 and their implications.
1. Revised Income Tax Slabs Under the New Regime
The new tax regime features revamped income tax slabs designed to provide relief to individual taxpayers:
- Income up to ₹3,00,000: Exempt
- Income from ₹3,00,001 to ₹7,00,000: 5%
- Income from ₹7,00,001 to ₹10,00,000: 10%
- Income from ₹10,00,001 to ₹12,00,000: 15%
- Income from ₹12,00,001 to ₹15,00,000: 20%
- Income above ₹15,00,000: 30%
These changes enable taxpayers opting for the new regime to save up to ₹17,500 annually compared to the previous structure.
2. Increased Standard Deduction Limit
The standard deduction limit under the new tax regime has been raised:
- Salaried Individuals: Increased to ₹75,000 from ₹50,000.
- Family Pensioners: Increased to ₹25,000 from ₹15,000.
The old regime retains the existing limits of ₹50,000 and ₹15,000, respectively. This adjustment makes the new regime more attractive for a broader segment of taxpayers.
3. Enhanced NPS Deduction for Employer Contributions
Taxpayers under the new regime can now claim deductions of up to 14% of their basic salary for employer contributions to the National Pension System (NPS), up from the earlier 10%. However, contributions exceeding ₹7.5 lakh across EPF, NPS, and superannuation funds remain taxable.
4. Simplified Capital Gains Taxation
Capital gains taxation has been simplified:
- Short-Term Capital Gains (STCG): Taxed at 20%, up from 15%.
- Long-Term Capital Gains (LTCG): Uniformly taxed at 12.5% for all assets.
An annual exemption of ₹1.25 lakh for equity and equity-oriented funds remains in place. While the simplified structure eases tax calculations, it limits indexation benefits for certain assets.
5. Rationalized TDS Rates
TDS (Tax Deducted at Source) rates have been streamlined to reduce complexity:
- Insurance Commissions: 2%
- Rent Payments: 2%
- E-commerce Payments: 0.1%
This rationalisation minimizes upfront deductions, allowing taxpayers greater liquidity.
6. Claiming TDS and TCS Credit Against Salary
Salaried individuals can now adjust TDS or TCS deductions from other income sources against TDS on their salary. This change improves cash flow management and increases monthly take-home pay.
7. Changes in TDS on Property Sales
For property transactions exceeding ₹50 lakh, TDS will now apply to the entire sale value, regardless of the individual seller’s share. This measure ensures better compliance and prevents TDS evasion.
8. Vivad Se Vishwas Scheme 2.0
The reintroduction of the Vivad Se Vishwas Scheme aims to resolve pending tax disputes amicably. Taxpayers can settle ongoing cases efficiently, reducing litigation and uncertainty.
9. Aadhaar Mandatory for ITR and PAN Applications
Starting October 2024, Aadhaar is be mandatory for filing ITRs and applying for PAN. Individuals without Aadhaar may face challenges in completing these processes, as Aadhaar enrolment numbers will no longer be accepted.
10.Reduced Time Limit for Revising Old ITRs
The time limit for reopening old ITRs has been reduced to five years for cases involving income escaping assessments above ₹50 lakh. This change aims to minimize prolonged litigation and provide greater certainty to taxpayers.
Key Takeaways for Taxpayers
The 2024 income tax changes emphasize simplification, enhanced compliance, and select taxpayer benefits. Here’s what you need to do:
- Evaluate the old and new tax regimes to determine the best fit for your income and financial goals.
- Stay informed about changes in TDS, capital gains, and deductions to optimize your tax planning.
- Act promptly to meet compliance requirements, including Aadhaar linking.
By understanding and adapting to these updates, you can maximize savings and streamline your ITR filing process for 2025.
Guidelines on Vivad Se Vishwas Scheme
Also Read: Budget 2025: Government May Introduce Tax Relief for Income Up to Rs 10.50 Lakh to Boost Consumption
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