ITR Filing: Income Tax Department has now released forms 1 and 4 now for filing of tax return for FY 2024-25. The last date to file tax returns for individual taxpayers is July 31. There are two tax regimes under which the income tax return can be filed: old tax regime and new tax regime. In the old regime, taxpayers are entitled to claim deductions for investment made in the tax instruments under provisions such as 80C, 80D and 80DD but the tax rates are relatively higher.
On the other hand, new tax regime does not permit taxpayers to claim tax deduction under different provisions but it charges concessional rates of tax.
New Tax Regime: These are key 7 points to know
I. Default regime: This is a default regime. In simple terms, every taxpayer now is supposed to be following this regime unless he decides to opt out of it at the time of filing tax regime.
II. Concessional rates: Tax rates which are applicable in the new tax regime are concessional i.e., lower than that of old tax regime. In other words, those earning upto ₹7 lakh are not supposed to pay any tax after factoring in rebate under section 87A .
III. Which tax rate apply: In the latest Budget 2025, meanwhile, taxpayers with annual income upto ₹12 lakh are not made to pay any income tax. The new rates will kick in from April 1, 2025. But taxpayers are filing their tax return for the income accrued in 2024-25, the rates introduced in Budget 2024 are applicable. These are as follows.
3-7 lakh rupees 5 per cent
7-10 lakh rupees 10 per cent
10-12 lakh rupees 15 per cent
12-15 lakh rupees 20 per cent
Above 15 lakh rupees -24 30 per cent
5 lakh to 10 lakh 20 per cent
IV. Intimating the employer: Salaried Taxpayers must inform the employer about his intended tax regime during the year. If the employee does not intimate, it will be believed that the employee continues to be in the default tax regime and has not opted out of the new tax regime. Therefore, the employer will deduct tax in accordance with the rates provided under section 115BAC.
V. House rent Allowance (HRA): House Rent Allowance is exempted for the salaried individuals. However, this exemption is not available under the new tax regime.
VI. Deductions permitted: While most deductions under chapter-VIA such as section 80C, 80D, 80DD and 80G are not permitted under the new tax regime. However, there are a few exceptions which are given in the new tax regime. These are deductions under sections 80CCD(2), 80CCH and 80JJAA.
VII. Switching between the regimes: Individual taxpayers are permitted to switch between tax regimes every year. This means even if you opted for the old tax regime last year, you can switch to the new regime this year and vice versa.
For all personal finance related news, click here.
