Income Tax Day, celebrated annually on July 24th, commemorates the introduction of income tax in India by Sir James Wilson in 1860. This year, the day is preceded by the announcement of the Union Budget 2024, which includes notable changes impacting income taxpayers. These changes were outlined by Finance Minister Nirmala Sitharaman in her budget speech on Wednesday.
One key change is the increase in standard deduction for salaried employees under the new tax regime. The government has raised this deduction from ₹ 50,000 to ₹ 75,000. Additionally, the deduction for family pensioners has been increased from ₹ 15,000 to ₹ 25,000.
Another significant announcement concerns the re-assessment of old Income Tax Returns (ITR). As per the new rules, only taxpayers with an annual income exceeding ₹ 50 lakh can face re-assessment of their old ITRs after three years. This means that tax authorities will not be able to open ITRs filed by other income taxpayers beyond a certain time limit.
The Union Budget 2024 also announced a revision in the new tax regime. This revision is designed to benefit salaried employees, potentially reducing their income tax liability by up to ₹ 17,500. Notably, over two-thirds of individual taxpayers opted for the new tax regime in the last financial year, and more than 8.61 crore IT returns were filed in FY 24.
The revised structure of the new tax regime includes an exemption from income tax for incomes up to ₹ 3 lakh. For income between ₹ 3-7 lakh, a 5 per cent tax will be levied, followed by 10 per cent between ₹ 7-10 lakh, 15 per cent between ₹ 10-12 lakh, 20 per cent between ₹ 12-15 lakh, and 30 per cent for income exceeding ₹ 15 lakh. These new tax slabs under the revised income tax regime will come into effect from April 1, 2025 (Assessment Year 2025-26).
