Income Tax News: Finance Ministry Clarifies New Tax Regime Amidst Social Media Misinformation

Income Tax News: The Finance Ministry has intervened to address the spread of misleading information on social media platforms regarding the new tax regime, emphasizing that no new changes will come into effect from April 1, 2024. Taxpayers retain the freedom to select between the old and new tax regimes based on their individual preferences and financial situations, with the option to withdraw from the new regime until filing their return for Assessment Year 2024-25. Eligible individuals without business income can switch between the old and new regimes annually.

It has come to notice that misleading information related to new tax regime is being spread on some social media platforms. It is therefore clarified that:

👉 There is no new change which is coming in from 01.04.2024.

👉 The new tax regime under section 115BAC(1A) was… pic.twitter.com/DtKGkK0D5H

— Ministry of Finance (@FinMinIndia) March 31, 2024

Clarification Highlights

1. No new changes will occur from April 1, 2024.
2. The new tax regime, introduced under section 115BAC(1A) in the Finance Act 2023, differs from the existing old regime (without exemptions).
3. The new regime, applicable to individuals excluding companies and firms, serves as the default regime from the Financial Year 2023-24, corresponding to Assessment Year 2024-25.
4. Tax rates under the new regime are notably lower, though various exemptions and deductions (excluding standard deductions) are unavailable compared to the old regime.
5. Taxpayers have the liberty to choose the tax regime (old or new) they deem advantageous.
6. Opting out from the new regime is permissible until filing the return for Assessment Year 2024-25. Eligible individuals without business income can choose the regime annually, alternating between the old and new tax structures.

Income Tax Slabs Comparison: New vs. Old Regime

New Tax Regime:

• Income from Rs.0 to Rs.3,00,000: 0% tax rate
• Income from Rs.3,00,001 to Rs.6,00,000: 5%
• Income from Rs.6,00,001 to Rs.9,00,000: 10%
• Income from Rs.9,00,001 to Rs.12,00,000: 15%
• Income from Rs.12,00,001 toRs.15,00,001: 20%
• Income above Rs.15,00,000: 30%

Old Tax Regime:

• Income up to Rs.2.5 lakh: Exempt from taxation
• Income from Rs.2.5 to ₹5 lakh: Taxed at 5%
• Income from Rs.5 lakh to ₹10 lakh: Taxed at 20%
• Income aboveRs.10 lakh: Taxed at 30%

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The Finance Ministry's clarification aims to dispel misinformation and ensure taxpayers are well-informed about their options and obligations under the tax regime.