Finance ministry’s 6-point note on new tax regime: ‘No new change coming in’
The Finance ministry clarified that there is no new change in the tax regime from April 1, 2024 as the interim budget’s income tax proposals come into effect from today (April 1). The finance ministry in a post in X (formerly Twitter) cleared confusion over the new tax regime. The new tax regime has low rates but fewer exemptions and deductions.
What Nirmala Sitharaman said in interim budget?
Presenting the interim budget on February 1, 2024, Union Finance minister Nirmala Sitharaman said that there would be no changes to taxation and proposed to retain the same direct and indirect tax rates.
What Finance ministry said on new tax regime?
Finance ministry said in a post, “It has come to notice that misleading information related to new tax regime is being spread on some social media platforms.”
The ministry shared six points for the financial year with respect to taxes.
“It is therefore clarified that:
— There is no new change which is coming in from 01.04.2024.
— The new tax regime under section 115BAC(1A) was introduced in the Finance Act 2023, as compared to the existing old regime (without exemptions) (SEE TABLE BELOW)
— New tax regime is applicable for persons other than companies and firms, is applicable as a default regime from the Financial Year 2023-24 and the Assessment Year corresponding to this is AY 2024-25.
— Under the new tax regime, the tax rates are significantly lower, although the benefits of various exemptions and deductions (other than standard deduction of Rs. 50,000 from salary and Rs. 15,000 from family pension) are not available, as in the old regime.
— New tax regime is the default tax regime, however, tax payers can choose the tax regime (old or new) that they think is beneficial to them.
— Option for opting out of the new tax regime is available until filing of return for the AY 2024-25. Eligible persons without any business income will have the option to choose the regime for each financial year. So, they can choose new tax regime in one financial year and old tax regime in another year and vice versa,” it was noted in the post.
As per the interim Budget, income tax slabs remain unchanged for the new financial year (FY2024-25). Income from ₹zero to ₹3,00,000 will be exempted from tax and the income slab from ₹3,00,001 to ₹6,00,000 will be taxed at 5 per cent, ₹6,00,001 to ₹9,00,000 at 10 per cent, ₹9,00,001 to ₹12,00,000 at 15 per cent, ₹12,00,001 to ₹15,00,000 at 20 per cent, and ₹15,00,000 and above at 30 per cent.