New income tax slabs and tax rates under the revised tax regime

Under the new tax regime for the FY 2023-24(AY 2024-25), the income tax slabs, as well as the rates, have been revised; let’s have a look at them.

• Up to ₹3,00,000: No tax
• ₹3,00,001 to ₹6,00,000: 5% tax
• ₹6,00,001 to ₹9,00,000: 10% tax
• ₹9,00,001 to ₹12,00,000: 15% tax
• ₹12,00,001 to ₹15,00,000: 20% tax
• ₹15,00,001 and above: 30% tax

Surcharge rate under the revised new tax regime

The rate of surcharge has been reduced from 37% to 25% for those who opt for the new tax regime and earn more than Rs. 5 crores. Therefore, the only people who will be affected by this increase in rates are those who choose to accept the new tax system and earn more than Rs. 5 crores in a year.

The concept of "5% on 3-6 Lakh, 10% on 6-9 Lakh, But No Tax on Income up to 7 Lakh" under new tax slabs

A tax rebate is similar to a reduction in your tax liability. But the catch is that this discount is only for residents or those who live in the country.

Tax slabs are the same set of parameters that all taxpayers, individuals, families, and businesses use to determine their tax liability. Whether or not you live in the country, these slabs determine how much tax you have to pay based on your income.

Hence, the first step in calculating your taxes is to determine how much taxes you owe by looking at these slab rates. The discount can then be deducted from that amount if you are an individual resident. This tax deduction reduces your final tax liability, even sometimes down to zero. However, you should note that this is only for resident individuals.

Deductions under the new tax regime

• If you're a salaried person, you can get a standard deduction of up to Rs 50,000.
• In addition, if you receive a pension, you can also get a standard deduction. It's either Rs 15,000 or one-third of your pension amount, whichever is less.
• If you have a home loan, you can deduct the interest you pay on the loan under section 24b. This applies if you've rented out the property.
• If your employer contributes to your NPS (National Pension Scheme), that contribution can also be deducted from your taxable income.
• Any contributions you make towards the Agniveer Corpus Fund, covered under section 80CCH, can also be deducted.

Changes in ITR Forms for AY 2024-25

1-Bank (For All ITR Form):

From now on, all of your bank account types must be mentioned on your tax forms.

2-Deductions (All ITR Forms): Section 80CCH now has a new section where deductions can be claimed. This deduction is only available to those who registered for the Agnipath Scheme after November 1, 2022.

3-Cash Receipts (ITR-3 & ITR-4) for 44AD:

The turnover limit for section 44AD is now Rs. 3 crores in ITR-3 and ITR-4 forms if your cash turnover is 5% or less. If not, it continues to stay at Rs.2 crores.

4- 44ADA (Cash Receipts; ITR-3 & ITR-4):

A new rule puts the turnover limit for section 44ADA in ITR-3 and ITR-4 forms at Rs. 75 lakhs if your cash turnover is 5% or less. If not, it will stay at Rs. 50 Lakhs.

5-Details of the CGAS Account (ITR-2 & ITR-3):

Long-term capital gains (LTCG) reinvestment has necessitated the submission of the "Date of deposit," "Account number," and "IFS Code" in addition to the amount deposited in a "capital gains accounting scheme" (CGAS) account.

6-E-Verification (ITR-2 & ITR-3): For individuals or HUFs going through a tax audit, the e-verification procedure has been simplified for the ease of Income tax E-filing in India. You can now utilize an electronic verification code (EVC) in addition to the Digital Signature Certificate (DSC). This is greatly helpful because individuals and HUFs will no longer have to buy DSC each year.

7-LEI Number (ITR-2 & ITR-3): LEI or Legal Entity Identifier is a unique 20-digit code used in global financial transactions.

The "LEI Number" and its "Valid UpTo Date" have been made mandatory for refund claims in ITR-2 and ITR-3, the amount of which is more than Rs. 50 crores.

8-Schedule VDA(ITR-2 & ITR-3):

From now on, every cryptocurrency sale needs to be recorded separately in Schedule VDA (ITR-2 & ITR-3).

9-Section 54GB (ITR-2 & ITR-3): Since section 54GB will expire on March 31, 2023, entrepreneurs will no longer be able to reinvest their long-term capital gains under this provision. Therefore, it is not listed on the FY 2024–2025 ITR forms.

10-IT date of filing due (ITR-3):

You will be required to select from a dropdown menu the date by which you must file your tax return while submitting your ITR-3 form. The due dates for Income Tax Returns (ITR) e-filing in India vary based on whether an audit is required or not. The deadlines are July 31, October 31, or November 30, depending on the specific circumstances related to the audit requirement.

11-Form 10IEA (ITR-3 & ITR-4): You must submit Form 10IEA before the deadline if you want to switch to the Old Tax Regime since the new tax regime is now the default.

12-UDIN and Tax Audit Acknowledgment Number (ITR-3): When filing your tax return, you must include the UDIN and the acknowledgment number of the audit report if your financial accounts are audited in accordance with sections 44AB and 92E.

13-New 80GGC Schedule (ITR-2 & ITR-3):

A new form named Schedule 80GGC now demands more information regarding contributions made to political parties. The date of the donation, the method of payment (such as check or UPI), the check number, the IFSC code of the bank, and the transaction reference number for UPI transfers must all be included.

14-New Schedule 80DD (ITR-2 & ITR-3): A new Schedule 80DD form has also been introduced. You can deduct money from your taxes by using this form to claim medical expenses for a family member who has a disability. The type of dependent, their PAN and Aadhaar numbers, the date of filing Form 10IA, the Form 10IA acknowledgment number, and, if available, the UDID (Unique Disability Identity Card) number must all be filled out.

Will there be a section 80C deduction under the revised new tax regime?

You will not be able to claim any section 80C tax deductions if you opt for the new tax system. This means that investments such as National Savings Certificates (NSC), Equity Linked Savings Schemes (ELSS), Public Provident Funds (PPF), Provident Funds (PF), and other qualifying investments will not provide any tax benefits.

Exemption on leave encashment under the new tax regime

The new tax regime offers you savings on leave encashment. The amount of money available for leave encashment without incurring taxes was significantly increased in the 2023 Budget. For those who are non-government employees, the amount increased from ₹3 lakhs to ₹25 lakhs. So, according to Section 10(10AA), you can get up to ₹25 lakhs as leave encashment upon your retirement, which will be completely free from taxes.

Presumptive taxation under the new regime

• There is no change in the presumptive scheme under both the new and old tax regimes.
• In the case of Small business owners under Section 44AD, Turnover/receipts is within Rs. 2 crore before Budget 2023 and Rs. 3 crore after Budget 2023.
• In the case of Specified professionals under Section 44ADA, the turnover/receipts is within Rs. Fifty lakhs before Budget 2023 and Rs. 75 lakh after Budget 2023.
• Note: 95% of earnings should be received online and not by cash payment.

Exemption and taxation of insurance proceeds under the new tax system

Any money you get from your life insurance policy is tax-free if the premiums you pay are less than 10% of the insured amount. However, some people have taken advantage of this by purchasing high-priced insurance in order to receive higher tax benefits. So, the government has placed restrictions on tax exemptions for high-value insurance policies in order to stop such misuse. Hence, the money that you receive from life insurance policies will now be subject to taxes if you pay more than Rs. 5 lakhs as a premium in a single year.

What is the standard deduction?

Regarding the standard deduction amount, taxpayers were a little confused as to whether it was ₹50,000 or ₹52,500. Confusion occurred after the Finance Minister mentioned ₹52,500 in a speech. However, the standard deduction is ₹50,000 and not ₹52,500 as specified in official documents such as the Finance Bill and the CBDT, i.e., Central Board of Direct Taxes. Hence, this is the amount you should consider for your taxes while doing Income tax E-filing in India.

Result of a standard deduction of Rs. 50,000 on an income of Rs. 7,50,000 under the new tax regime

For those individuals whose income is up to ₹ seven lakhs, there is good news about the new tax rules proposed in Budget 2023. Under the new tax regime, they will not be required to pay any taxes at all. The reason for this is the introduction of special tax relief for incomes up to ₹ seven lakhs. In addition to this, all taxpayers are subject to a standard deduction of ₹50,000 under the new guidelines. Therefore, if someone chooses the new tax system, they will not have to pay any tax if their income is equal to ₹7.5 lakhs or less than that.

Rules for switching back to the old tax regime

• Changes in Income Tax regime for FY 2023-24 :
• This new income tax regime will be the default tax regime from FY 2023-24.
• Switching to the old tax regime requires a specified form at the time of return filing.
• The frequency of switching between old and new tax regimes depends on the type of income.
• In the case of Business/professional income, the switch is only once in a lifetime.
• In case of any income other than this, the switch can be done annually.

Benefits of the new tax regime

A taxpayer is no longer forced to maintain track of rent receipts, airline tickets, or complicated tax planning under the new tax regime. Since there are fewer deductions and reduced tax rates under the new tax system, the need to purchase insurance policies and tax-saving plans that might not be compatible with his financial goals can be eliminated.