The year 2024 saw significant income tax changes announced during the Union Budget presented in July 2024, following the General Elections held earlier in the year. These changes, effective from FY 2024-25, will directly influence tax filings for AY 2025-26, which will be starts from April 2025 and also Income Tax planning is required for 2025 so you should know15 key changes and their implications for taxpayers:
1. New Income Tax Slabs under the New Tax Regime
The revised slabs under the new tax regime aim to provide higher savings for taxpayers.
| Income Tax Slab (Rs) | Tax Rate (%) |
|---|---|
| 0 – 3,00,000 | 0% |
| 3,00,001 – 7,00,000 | 5% |
| 7,00,001 – 10,00,000 | 10% |
| 10,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| 15,00,001 and above | 30% |
Impact: Taxpayers can save up to Rs. 17,500 annually.
2. Increased Standard Deduction Limit
| Taxpayer Type | Old Deduction (Rs) | New Deduction (Rs) |
| Salaried and Pensioners (New Regime) | 50,000 | 75,000 |
| Family Pensioners (New Regime) | 15,000 | 25,000 |
Impact: Higher standard deductions lower taxable income under the new tax regime.
3. Enhanced NPS Deduction
Deduction for employer’s contribution to NPS under the new tax regime increased from 10% to 14% of basic salary.
Impact: More tax savings for individuals under the new tax regime.
4. Unified Tax Rates for Capital Gains
| Type of Gain | New Tax Rate (%) | Previous Tax Rate (%) |
| Short-term (Equity) | 20 | 15 |
| Long-term (All Assets) | 12.5 | Varies by Asset |
| LTCG Exemption (Equity) | 1.25 lakh/year | 1 lakh/year |
Impact: Simplified taxation regime, but with higher short-term capital gains tax.
5. Revised Holding Periods for Capital Gains
| Asset Type | New Holding Period (Years) | Previous Period (Years) |
| Listed Securities | 1 | 1 |
| Non-Listed Securities | 2 | 2 or more |
Impact: Standardized holding periods for capital gain classification.
6. Rationalized TDS Rates
| Section | Nature of Payment | New TDS Rate (%) | Effective Date |
| 194D | Insurance Commission (Non-Company) | 2 | April 1, 2025 |
| 194DA | Insurance Policy Proceeds | 2 | October 1, 2024 |
| 194G | Lottery Commission | 2 | October 1, 2024 |
| 194H | Commission/Brokerage | 2 | October 1, 2024 |
| 194-IB | Rent Payments by Individuals/HUF | 2 | October 1, 2024 |
| 194M | Payments by Individuals/HUF | 2 | October 1, 2024 |
| 194-O | Payments by E-commerce Operators | 0.1 | October 1, 2024 |
Impact: Streamlined TDS rates for better compliance.
7. TDS/TCS Tax Credit Mechanisms
Salaried taxpayers can now claim credit for TDS on other incomes (non-salary) and TCS on expenses to reduce tax deducted from salary.
Impact: Improved cash flow for salaried individuals.
8. Transfer of TCS Credit
Tax Collected at Source (TCS) credit can now be transferred to another individual, such as parents for children’s education expenses.
Impact: Greater flexibility for taxpayers in managing cash flow.
9. Tax on Buyback of Shares
Proceeds from share buybacks will now be taxed in the hands of shareholders at their applicable income tax slab rates.
Impact: Higher tax liability for those in higher income tax slabs.
10. TCS on Luxury Goods
TCS to apply to luxury goods purchases exceeding Rs. 10 lakh.
Impact: Increased cost for high-value purchases.
11. Amended TDS on Property Sales
TDS will be deducted on the entire transaction value if it exceeds Rs. 50 lakh, regardless of individual shares.
Impact: Prevents tax evasion during property transactions.
12. RBI Floating Rate Bonds Subject to TDS
TDS to apply to interest exceeding Rs. 10,000 per month.
Impact: Reduced cash inflow for bond investors.
13. Vivad Se Vishwas 2.0
Aimed at resolving tax disputes, this scheme offers a simplified settlement process.
Impact: Helps reduce litigation.
14. Aadhaar Enrolment Numbers Not Accepted
Only Aadhaar numbers will be accepted for ITR filing and PAN applications.
Impact: Mandatory Aadhaar required for compliance.
15. Revised Time Limits for Reopening ITRs
Time limit reduced to 5 years (from 10) for reopening cases where income escaping assessment exceeds Rs. 50 lakh.
Impact: Shortened timeframe for tax reviews.
These updates in tax rules for FY 2024-25 aim to simplify compliance while ensuring fairness. Taxpayers should review these changes carefully and plan their financial activities accordingly.
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Madam, Pooja ji (CA) / Income tax Adviser, Though your way of explaining for Deduction limit/ Exemption limit And other issues which are NEW, you are requested to please explain SLOWLY, because there are many SPECIFIED SENIOR CITIZENS/ SUPER SENIOR CITIZENS who can’t understand in such a fast speed. Please explain SLOWLY.
Thanks for sharing the knowledge mam. Keep posted