Have Income Tax Rates Changed From April 1? Govt Puts Out Clarification

The government on Monday quashed rumours circulating on social media that suggested major changes would be implemented to India’s current tax rates.

What Happened: The government clarified on Monday that there will be no new changes to income tax rules taking effect from April 1.

Issuing a comprehensive statement, the Ministry of Finance aimed to debunk any misleading information circulating on social media regarding the new tax regime.

A number of posts on social media platforms such as X said the government would set the “new tax regime” as the default option for income tax payers.

Government’s Points To Note: The statement from the government highlighted that the new tax regime, effective from the financial year 2023-24 and the assessment year 2024-25, applies to individuals other than companies and firms by default.

Under this regime, tax rates are notably lower, but various exemptions and deductions, except for the standard deduction of ₹50,000 from salary and ₹15,000 from family pension, are not available as in the old tax regime.

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While the new tax regime is the default option, taxpayers have the freedom to choose the tax regime they deem most beneficial, the government underscored. It’s important to note that the option to opt out of the new tax regime is available until filing the return for the assessment year 2024-25.

Individuals without any business income have the flexibility to select the regime for each financial year. This means they can switch between the new and old tax regimes as per their preference.

Freedom Of Choice: With the onset of the new financial year, individuals can opt to continue with the existing regime or switch to the new one. The old regime allows for several deductions and exemptions under sections like 80C, 80D, HRA and LTA. However, it comes with a more complex structure and higher tax slabs in certain brackets.

In contrast, the new regime offers lower tax rates but eliminates most deductions and exemptions. While it simplifies the filing process, it may not suit everyone’s financial circumstances.

Under the new tax regime, individuals earning up to ₹7.5 lakh are exempt from paying taxes, providing a significant benefit. Additionally, those with incomes up to ₹10 lakh and no investments can benefit from the lower tax slabs offered by this system.

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Posted In: GovernmentRegulationsincome tax