The year 2024 introduced several significant changes to income tax regulations that will influence the filing of Income Tax Returns (ITR) in 2025. These updates aim to provide tax relief, encourage savings, and streamline tax processes. Here are the 10 key changes to be aware of:
1. Revised Income Tax Slabs
The government has updated the income tax slabs under the new tax regime for FY 2024-25:
- Income up to ₹3,00,000: No tax
- ₹3,00,001 to ₹7,00,000: 5%
- ₹7,00,001 to ₹10,00,000: 10%
- ₹10,00,001 to ₹12,00,000: 15%
- ₹12,00,001 to ₹15,00,000: 20%
- Above ₹15,00,001: 30%
This restructuring is intended to reduce the tax burden for a wide range of taxpayers.
2. Increased Basic Exemption Limit
The basic exemption limit has been raised from ₹2.5 lakh to ₹3 lakh, exempting more low-income earners from paying income tax.
3. Higher Standard Deductions
For salaried individuals under the new tax regime:
- The standard deduction has increased from ₹50,000 to ₹75,000.
- Family pensioners can now claim a deduction of ₹25,000, up from ₹15,000.
4. Changes in TDS Regulations
The deduction limit for employers’ contributions to the National Pension System (NPS) has been increased from 10% to 14% of the basic salary. This allows employees to save more for retirement while reducing taxable income.
5. Updated Tax Rates for Capital Gains
- Short-Term Capital Gains (STCG) on equity investments will now be taxed at 20% (up from 15%).
- Long-Term Capital Gains (LTCG) are taxed at a flat rate of 12.5%.
- The LTCG exemption limit for equity and equity-oriented mutual funds has been raised from ₹1 lakh to ₹1.25 lakh annually.
6. Shortened Holding Period for Capital Gains
The holding period for classifying assets as long-term has been simplified:
- 12 months for listed securities.
- 24 months for other assets.
The earlier 36-month rule has been removed.
7. TDS/TCS Tax Credit Adjustments
Salaried employees can now claim credits for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) on other incomes and expenses, leading to more accurate tax deductions on salaries.
8. New TCS Rule on Luxury Goods
Luxury goods purchases exceeding ₹10 lakh will incur a Tax Collected at Source (TCS), increasing their overall cost for high-end buyers.
9. Reintroduction of Vivad Se Vishwas Scheme
The government has reintroduced this scheme to expedite the resolution of tax disputes, aiming to minimize litigation and settle disagreements between taxpayers and the Income Tax Department.
10. Higher NPS Deduction Limit
Employees under the new tax regime can claim a higher deduction for employers’ NPS contributions, which has increased from 10% to 14% of the basic salary, further encouraging retirement savings.
These changes reflect the government’s effort to simplify tax regulations, provide relief to taxpayers, and foster a more efficient tax system. It’s crucial for individuals to familiarize themselves with these updates to maximize benefits during the 2025 ITR filing process.
