According to the Finance Ministry, individual taxpayers can stay out of the new tax regime when they file their income tax return (ITR). They add that there are no changes to the government for the current fiscal year.
Finance Ministry post regarding New Tax Regime
The Ministry clarified on social media posts asserting that the new regime would undergo various modifications starting on April 1. They say, “There is no new change coming in from 01.04.2024.”
With effect from April 1, 2023, a revised new income tax system was implemented for people with “significantly lower” tax rates. But unlike under the previous regime, no exclusions or deductions are available (except for the basic deduction of ₹50,000 from wage and ₹15,000 from the family pension).
The default tax regime is the new one. Nonetheless, taxpayers are free to select the tax system (old or new) that best suits their needs. The Ministry stated that until the AY 2024–2025 return is filed, there is still time to choose not to participate in the new tax system.
About the New Tax Slab
The new tax exempts income up to ₹3 lakh from tax. If your income falls between ₹3-6 lakh and ₹6-9 lakh, you will be subject to a 10% tax. 15% and 20% of income between ₹9–12 lakh and ₹12–15 lakh is taxed, respectively. If your income exceeds ₹15 lakh, you will be subject to a 30% tax.
The Assessment Year 2024–2025 corresponds to the new tax regime established as “a default regime” beginning in 2023–2024. The taxpayer has the option to change this while filing their ITR. Every financial year, those meeting requirements but do not have revenue from their firm will be able to select regime. Finance Ministry says, they can select old tax regime in one financial year and new tax regime in another. In simple, words choice can be made on alternate basis.
Income up to Rs 2.5 lakh is exempt from taxes under previous tax system, which is still in effect. Further, it provides several deductions and exemptions. 5% tax is applied to income between ₹2.5 and ₹5 lakh, while 20% tax is applied to income between ₹5 and ₹10 lakh. A 30% tax is applied to income over ₹10 lakh.
Also read: Infosys income tax refund amounts to Rs. 6329 crore!
