Table of Contents
Introduction
Income tax is a type of direct tax paid to the central government of India. It is the primary source of revenue for the government. It plays an important role in financing various developmental and welfare activities. It is governed by the Income Tax Act of 1961 and is administered by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance, Government of India.
Types of Income Tax
- Personal Tax
- Corporate Income Tax
- Capital Gains Tax
- Securities Transaction Tax (STT)
- Dividend Distribution Tax (DDT)
- Minimum Alternate Tax (MAT)
- Tax Deducted at Source
The new tax slabs under the new tax regime
| Income Slabs | Tax Rates |
| up to Rs 3 lakh | Nil |
| Rs 3 lakh- Rs 6 lakh | 5% |
| Rs 6 lakh-Rs 9 lakh | 10% |
| Rs 9 lakh-Rs 12 lakh | 15% |
| Rs 12 lakh- Rs 15 lakh | 20% |
| Above Rs 15 lakh | 30% |
Standard Deduction for Salaried Employees and Pensioners
Salaried employees and pensioners can claim a standard deduction of Rs 50,000 under the new tax regime, reducing their taxable income.
Reduction in Highest Surcharge
The highest surcharge for individuals earning over Rs 5 crore has been lowered to 25% from 37%, resulting in a reduced tax rate of 39% for this group.
Default New Tax Regime
The new Income Tax (IT) regime becomes the default tax regime, providing a simplified tax structure for taxpayers. However, individuals have the option to opt out before the due date for filing IT returns for the respective assessment year.
Enhanced Leave Encashment Limit
Non-government employees benefit from an increased limit for leave encashment, raised from Rs 3 lakh to Rs 25 lakh, offering greater flexibility in utilizing accrued leave benefits.
Decrease in TDS Rate on EPF Withdrawal
The Tax Deducted at Source (TDS) rate on Employee Provident Fund (EPF) withdrawals has been reduced from 30% to 20%, easing the tax burden on EPF subscribers during withdrawal.
Interim Budget 2024 Updates
1. Maintenance of Existing Tax Rates: The interim budget for 2024 keeps the current tax rates unchanged for both direct and indirect taxes.
2. Tax Exemption for Lower Income Groups: Individuals earning up to Rs 7 lakh annually have no tax liability, providing relief for lower income groups.
3. Withdrawal of Tax Dispute Provisions: Finance Minister Nirmala Sitharaman withdraws tax dispute claims up to Rs 25,000 for disputes pertaining to the financial year 2009-10 and Rs 10,000 for disputes from financial years 2010-11 to 2014-15.
4. Enhanced Leave Encashment Limit: The limit for leave encashment for non-government employees has been raised significantly from Rs 3 lakh to Rs 25 lakh.
5. Reduction in TDS Rate on EPF Withdrawal: The Tax Deducted at Source (TDS) rate on Employee Provident Fund (EPF) withdrawals has been decreased from 30% to 20%, providing relief to EPF subscribers.
6. Standard Deduction for Salaried Employees: Salaried employees and pensioners can claim a standard deduction of Rs 50,000 under the new tax regime.
7. Reduction in Highest Surcharge: The highest surcharge for individuals earning more than Rs 5 crore has been reduced to 25% from the previous 37%, resulting in a decreased tax rate for this bracket.
8. Opt-Out Provision for New Tax Regime: While the new tax regime will be the default option, taxpayers have the option to opt out before the due date for filing income tax returns for the respective assessment year.