Income Tax Changes In 2024 That Taxpayers Should Know About Ahead Of Budget 2025
With Budget 2025 to be presented in just days, know about the changes made in Budget 2024, including standard deduction, income tax slabs and more.
Ahead of the presentation of Union Budget 2025 on February 1 by FM Nirmala Sitharaman, taxpayers should know all about the changes made in the Budget 2024 that directly impacted both income tax and investing. The changes around income tax slabs and capital gains have been aimed at providing relief to income tax payers.
Standard Deduction
Under the tax regime, the standard deduction was increased from Rs 50,000 to provide further relief for income tax payers. The provision of rebate on tax was increased to Rs 75,000. The limit for family pensioners was also raised from Rs 15,000 to Rs 25,000.
Employer's Contribution
To the delight of these income tax payers, the deduction limit on an employer’s contribution to the National Pension System, also known as the NPS, was increased. The limit was earlier set at 10% and this was raised to 14%. The raised limit is aimed to help more employees build their retirement corpus.
Luxury Goods
There will be a tax collection at source or TCS implemented on luxury goods that are worth more than Rs 10 lakh. Effective from Jan. 1, this change is aimed at keeping a track of the movement of expensive goods. The decision is also expected to reduce tax evasion.
Capital Gains
The tax rate for short-term capital gains or STCG has been increased from 15%. The short term taxation rates were then raised to 20%. The tax rate for long-term capital gains or LTCG was set at 10% earlier. During the budget, this was increased to 12.5%.
The LTCG exemption limit on equity investments had also been increased from Rs 1 lakh to Rs 1.25 lakh. These changes in the taxation of capital gains were taken up to encourage long-term holding.
New Income Tax Regime
The income tax slabs of the new tax regime were revised. The new structure levied no tax on income up to Rs 3 lakh. Income from Rs 3 lakh to Rs 7 lakh was taxed at 5% and income from Rs 7 lakh to Rs 10 lakh taxed at 10%.
Income from Rs 10 lakh to Rs 12 lakh was taxed at 15% and income from Rs 12 lakh to Rs 15 lakh was taxed at 20%. Income earned above Rs 15 lakh is taxed at 30%.
The first two income tax brackets have been extended by a lakh and the brackets of the last two slabs remained unchanged.
