Income tax is an essential planning tool for people and companies. It’s the tax the central government imposes on income for the financial year. Here in this article, we will state the latest updates, fundamentals, tax slabs, rules and income tax guidebook for 2024-25.
What is New with Income Tax?
The brand new tax regime has brought a tax rebate for income up to Rs 7 lakh. That means taxpayers earning below Rs 7 lakh pay absolutely no tax under this regime. The new tax slabs for FY 2023-24 under the new tax regime are the following :
| Income Range | Tax Rate |
| Up to Rs 3 lakh | Nil |
| Rs 3 lakh to Rs 6 lakh | 5% |
| Rs 6 lakh to Rs 9 lakh | 10% |
| Rs 9 lakh to Rs 12 lakh | 15% |
| Rs 12 lakh to Rs 15 lakh | 20% |
| Above Rs 15 lakh | 30% |
This new regime tax slab allows salaried workers and pensioners a regular deduction of Rs 50,000. Additionally, it dropped the highest surcharge to 25% from 37% for individuals making more than Rs five crore – moving the tax rate down to 39% from 42.74%. The new IT regime will be the default tax regime, though taxpayers can opt out before the due date for filing IT returns for the assessment season. Additionally, leave encashment for non government employees was hiked to Rs 25 lakh from Rs three lakh and also the TDS rate for EPF withdrawal have been hiked to 20% from 30%.
Basics of Income Tax
Income tax is a tax levied by the central government on earnings received by businesses and individuals during a monetary year.
Types of Taxes
Taxes are broadly split into 2 categories : direct taxes and indirect taxes. Income tax is really a direct tax. A 2nd significant direct tax is company tax, which businesses spend on their taxable income.
Who Should Pay Income Tax?
Under the Income Tax Act, everybody in India, resident or even non resident, is liable to file Income Tax returns if their Income crosses Rs three lakh in a fiscal year. Various tax laws pertain to various taxpayer categories. The main categories are:
- Individuals.
- Hindu Undivided Family.
- Firms.
- Companies.
- Association of Persons.
- Body Of Individuals.
- Local Authority.
- Artificial Person.
Resident people are further categorised into:
- Below sixty years of age.
- People more than sixty but under 80 years of age.
Residents pay taxes on their global earnings & non-residents pay tax solely on income generated in India.
Taxpayers & Tax Slabs
Different taxpayers pay taxes differently under Indian income Tax laws. Whereas firms & companies pay a flat rate of tax, individuals, HUFs, BOIs and AOPs pay tax based on the revenue tax slab under which they are taxable. The tax rate increases with taxable income.
Existing/Old income tax regime – The old tax Regime has 3 slab rates for Income tax:
| Income Range | Tax Rate |
| Up to Rs 2,50,000 | Nil |
| From Rs 2,50,000 to Rs 5,00,000 | 5% |
| From Rs 5,00,000 to Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
This regime enables individuals to claim deductions including Leave Travel Concession, House Rent Allowance and investments under Section 80C to 80U. There’s also a Rs 50,000 regular deduction and an interest deduction on mortgages.
New tax Regime – The new tax regime encourages taxpayers to adopt this regime by releasing revised new regime tax slab rates for FY 2023-24:
| Income Range | Tax Rate |
| Up to Rs 3 lakh | Nil |
| Rs 3 lakh to Rs 6 lakh | 5% |
| Rs 6 lakh to Rs 9 lakh | 10% |
| Rs 9 lakh to Rs 12 lakh | 15% |
| Rs 12 lakh to Rs 15 lakh | 20% |
| Above Rs 15 lakh | 30% |
This regime excludes most deductions and exemptions apart from transport allowance for specially abled persons and conveyance allowance for employment related expenditures.
Exceptions to the tax slab
Not all income is taxed slab style. Gains in capital, for instance, are taxed based on the asset type and holding period. Long-term and short-term capital gains carry different tax rates based on asset type.
Filing Your Income Tax Return (ITR)
E-Filing most taxpayers must file income tax returns electronically. Taxpayers over 80 and all those below Rs five lakh without refund claim are exempt from e-filing. For nearly all individual taxpayers the return filing deadline is 31 July of the assessment year.
Income Tax forms The government has prescribed seven ITR Forms for particular taxpayer types:
| Form | Description |
| ITR-1 | Persons earning up to Rs 50 lakh from salary, one house property, and other sources. |
| ITR-2 | Individuals / HUFs without business / profession income. |
| ITR-3 | Individuals/HUFs earning a salary from a proprietary business or profession. |
| ITR-4 | Individuals/HUFs assuming presumptive income from business or profession. |
| ITR-5 | Partnership firms or LLPs. |
| ITR-6 | Those are companies. |
| ITR-7 | Trusts. |
Report Accurate Income & Deduction Claims
Verification of return – Once the return is filed it must be verified. The taxpayers may verify the returns electronically via an Aadhaar OTP, Net banking or other prescribed means or even send a hard copy of the signed ITR-V to the CPC office.
Common deductions – Under Income Tax the Income Tax Act offers several deductions to taxpayers which decrease taxable income:
| Section | Description |
| Section 80C | Deductions as much as Rs 1.5 lakh for investments in instruments like EPF, ELSS, PPF, NSC & life insurance premiums. |
| Section 80D | Deductions for health care payments not exceeding Rs 25,000 (Rs 50,000 for seniors). |
| Section 24(b) | Deduction on home loan interest up to Rs 2 lakh. |
| Section 80E | Deduction on interest paid on education loans. |
| Section 80G | Deductions for donations to specified charitable institutions and funds. |
Conclusion
Understanding income tax basics, latest updates, tax slabs & rules is important for financial planning. The new tax regime means taxpayers have more choices for handling tax liabilities. Keeping up with the most recent changes and complying with tax laws assists with legal compliance and financial stability.
FAQs
What are the brand new revisions to the 2024-25 income tax laws?
The income tax rules for 2024-25 have some major changes following the latest updates. The interim budget for 2024 kept existing tax rates unchanged but brought a significant update in that taxpayers up to Rs 7 lakh have no tax liability under the new tax regime. It also has offered a rebate under the brand new tax system for individuals earning up to Rs seven lakh without tax liability. The highest surcharge for individuals making over Rs five crore has been cut to 25% from 37%. Leave encashment for non-government workers increased to Rs twenty five lakh from Rs three lakh and also the TDS rate for EPF withdrawal was cut to 20% from 30%.
What are income tax slabs for 2024-25?
The income tax slabs for financial year 2024-25 are the following:
| Income Range | Existing/Old Regime Tax Rate | New Regime Tax Rate |
| Up to Rs 2,50,000 | Nil | – |
| Up to and including Rs 3,00,000 | – | Nil |
| From Rs 2,50,000 to Rs 5,00,000 | 5% | – |
| From Rs 3,00,000 to Rs 6,00,000 | – | 5% |
| From Rs 5,00,000 to Rs 10,00,000 | 20% | – |
| From Rs 6,00,000 to Rs 9,00,000 | – | 10% |
| From Rs 9,00,000 to Rs 10,00,000 | – | – |
| From Rs 9,00,000 to Rs 12,00,000 | – | 15% |
| Above Rs 10,00,000 | 30% | – |
| From Rs 12,00,000 to Rs 15,00,000 | – | 20% |
| Above Rs 15,00,000 | – | 30% |
How can I compute my 2024-25 income tax?
In order to compute your 2024-25 income tax, follow the following steps:
- Find Your Total Income: Add all your income (salary, capital gains, house property, business, along with other sources) together.
- Claims Deductions : Take qualified deductions under sections 80C, etc., 80D, out of your gross income to figure out your taxable income.
- Use Tax Slabs: Divide your tax liability by the applicable tax slabs (old or new regime).
- Add Surcharge & Cess: Add the applicable surcharge and health & education cess (now 4%) in your computed tax.
- Adjust with regard to TDS & Advance Tax: Add tax at source (TDS) and advance tax paid for the entire year.
Use income tax slab rates for the chosen regime to calculate your liability.
What basic income tax filing requirements apply to individuals?
The basic income tax filing requirements for individuals include:
- Filing Mandatory: Anybody over the basic exemption limit (Rs 2.5 lakh for below 60 years, Rs 3 lakh for seniors and Rs 5 lakh for super senior citizens) should file returns.
- PAN Requirement: A valid PAN is necessary for filing returns.
- E-Filing: Many taxpayers need to file electronically. Those over 80 with earnings below Rs five lakh without refund claim are exempt from e-filing.
- Documentation: Documents required consist of Form 16, Form 26AS, AIS, TIS, proof of deductions and bank statements.
- Due Date: The due date for filing returns is generally 31 July of the assessment year.
Where could I get a comprehensive income tax guidebook for 2024-25?
A detailed Income Tax guide for 2024-25 is available at the income tax Department of India official site.
