15 Big Income Tax Rule Changes for FY 2024-25

15 Big Income Tax Rule Changes for FY 2024-25: Every financial year, the Government of India updates the income tax rules to simplify the tax process and meet economic goals. When income tax rules are changed, they are done to encourage more taxpayers to join and benefit them in good ways. For taxpayers, it is important to stay informed about these changes to ensure compliance and maximize benefits. Here, we will shed light on the 15 biggest income tax rule changes for FY 2024-25, providing a detailed explanation and their implications.

1. Revised Tax Slabs Under the New Regime

The government has revised the tax slabs under the new tax regime, making it more beneficial for middle-income groups. Individuals earning up to Rs.7 lakh annually can now enjoy zero tax liability due to increased rebate thresholds under Section 87A.

2. Standard Deduction for Salaried Employees

Under the new tax regime, salaried employees can now claim a standard deduction of Rs.50,000, bringing it in line with the old regime.

3. Higher Rebate u/s 87A

The rebate under Section 87A has been increased to Rs.25,000 for taxpayers with annual incomes up to Rs.7 lakh, encouraging a shift to the new regime.

4. Introduction of Agnipath Scheme Tax Benefits

Income received under the Agnipath Scheme has been made tax-free. Additionally, contributions to the Agniveer Corpus Fund qualify for deduction under Section 80C.

5. No LTCG Tax Benefits on Debt Mutual Funds

Long-term capital gains (LTCG) benefits on debt mutual funds have been removed. These investments will now be taxed as per the investor’s income tax slab.

6. Changes in TDS Rates

Tax Deducted at Source (TDS) rates on certain categories, such as online gaming winnings and high-value life insurance policies, have been revised to enhance compliance and reduce evasion.

7. Updated Tax-Free Leave Encashment Limit

The tax-free leave encashment limit for non-government employees has been increased from Rs.3 lakh to Rs.25 lakh, providing relief to retiring employees.

8. Introduction of New Tax Regime by Default

The new tax regime will now be the default regime for all taxpayers. However, individuals can opt for the old regime by submitting the necessary declaration.

9. Higher Tax on Foreign Remittances

The TCS (Tax Collected at Source) rate on foreign remittances under the Liberalized Remittance Scheme (LRS) has been increased to 20% for non-educational and non-medical expenses.

10. Taxation on High-Value Insurance Policies

Maturity proceeds of life insurance policies with premiums exceeding Rs.5 lakh annually will now be taxable, effective April 1, 2024.

11. Removal of Deductions on ELSS Under New Regime

The Equity Linked Savings Scheme (ELSS) will no longer qualify for tax deductions under the new tax regime, reducing its attractiveness as a tax-saving instrument.

12. Higher Limit for Presumptive Taxation

The turnover limit for presumptive taxation schemes for professionals and businesses has been raised to Rs.75 lakh and Rs.2 crore, respectively, provided receipts are primarily digital.

13. Increased Tax on Online Gaming

Online gaming winnings are now subject to a 30% tax, regardless of the amount, with TDS applicable at withdrawal or year-end.

14. Capital Gains Exemption on Residential Property Purchase

The maximum capital gains exemption on reinvestment in residential property under Sections 54 and 54F has been capped at Rs.10 crore.

15. New Compliance Requirements for Startups

Startups receiving investments above the fair market value must provide additional disclosures to ensure transparency and prevent tax evasion.

FAQs About Income Tax Rule Changes