According to the finance ministry, individual taxpayers can choose to opt out of the new income tax regime for themselves at the time of filing their ITR, and there are no changes to the regime for the current fiscal year.
The ministry clarified on social media posts asserting that the new tax regime would undergo certain changes starting on April 1 by saying, “There is no new change which is coming in from 01.04.2024.” With effect from April 1, 2023, a revised new income tax system was implemented for individuals, with “significantly lower” tax rates.
But unlike under the previous system, there are no longer any exemptions or deductions from various taxes (apart from the standard deduction of Rs 50,000 from salary and Rs 15,000 from 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 return for the AY 2024–2025 is filed, there is still time to choose not to participate in the new tax system.
Up to Rs 3 lakh in income is tax-free under the new I-T regime. Income between Rs 3-6 lakh is subject to a 5% tax, while income between Rs 6-9 lakh is subject to a 10% tax.
Tax rates for income between Rs 9–12 lakh and Rs 12–15 lakh are 15% and 20%, respectively. Income over Rs 15 lakh would be subject to a 30% I-T.
The Assessment Year 2024–2025 corresponds to the new tax regime, which was established as “a default regime” beginning in 2023–2024. When an individual files an income tax return (ITR), they have the option to modify this.
Every financial year, those who meet the requirements but do not have any revenue from their business will be able to select the regime.
According to a statement from the ministry, they can select a new tax regime for one financial year and an old tax regime for another, and vice versa.
Income up to Rs 2.5 lakh is exempt from taxes under the previous tax system, which is still in effect and provides a number of deductions and exemptions.
Taxes are levied at the rates of 5% on income between Rs 2.5 and Rs 5 lakh and 20% on income between Rs 5 and Rs 10 lakh. Income over Rs 10 lakh is subject to a 30% tax.
