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Benefits of New Tax Regime for Salaried Individuals as per Budget 2024 with Automatic Arrears Relief Calculator U/s 89(1) with Form 10E for the F.Y.2024-25

Input sheet

Introduction

Salaried individuals must understand the new tax regime introduced in Budget 2020 to make informed decisions about their taxes. Recent updates in Budget 2023 make it even more crucial to comprehend the benefits offered by the new tax regime for the financial year 2024-25.

Budget 2024 Updates

Therefore, In the 2024 interim budget, Finance Minister Nirmala Sitharaman announced the continuation of existing tax rates for the fiscal year 2024-25.  In other words, This means that the changes introduced in the previous budget regarding tax rates and deductions will persist. A comprehensive budget is expected to be presented after the formation of the new government following the Lok Sabha elections.

New Tax Regime Overview

 However, Budget 2020 introduced a new tax regime to provide taxpayers with concessional tax rates. However, it restricted the ability to claim significant deductions like HRA, LTA, and 80C. Above all, Budget 2023 made several key changes to address this issue and encourage more taxpayers to opt for the new regime.

Default Regime

For instance, One significant change is designating the new tax regime as the default option. This means that if taxpayers do not specify their preference to their employers, the TDS calculation will be based on the new tax regime starting from the financial year 2023-24.

Tax Rate

The new tax regime raised the basic exemption limit to Rs 3 lakh from Rs 2.5 lakh, making it more attractive for taxpayers. Additionally, incomes exceeding Rs 15 lakh will be subject to the highest tax rate of 30%.

Rebate Limit

Under section 87A, the rebate limit increased to Rs 7 lakh from Rs 5 lakh for the new tax regime. Taxpayers can avail of a rebate of up to Rs 25,000 provided their income does not exceed Rs 7 lakh.

Standard Deduction

From FY 2023-24 onwards, individuals with salary income can claim a standard deduction of Rs 50,000. Family pensioners opting for the new tax regime can avail of a standard deduction of Rs 15,000 from their pension income.

Slashed Surcharge Limit

High-income earners will benefit from the reduction in surcharge, with the surcharge on annual incomes above 5 crores lowered from 37% to 25%. This adjustment lowers the maximum tax rate to 39%.

Leave Encashment Exemption

The tax exemption limit on leave encashment for non-government salaried employees significantly increased to Rs 25 lakh from Rs 3 lakh.

Insurance Plans

Income from traditional insurance policies with premiums exceeding Rs 5 lakh will no longer be tax-free, as per the Budget 2023-24 announcements.

Tax Slabs

The new tax regime simplified the income tax slabs, reducing them from six to five. The revised tax structure for the new tax regime is as follows:

Income Tax New Slab

(Note: The changes introduced in Budget 2023 remain applicable for FY 2024-25 as no alterations were made in the Interim Budget 2024.)

Automatic Arrears Relief Calculator

The introduction of an Automatic Arrears Relief Calculator under section 89(1) with Form 10E simplifies the process of calculating and claiming tax arrears relief for the financial year 2024-25.

Form 10E

Form 10E is essential for salaried individuals seeking tax relief under section 89(1). It facilitates the calculation and declaration of arrears for tax filing purposes.

Comparison: Old vs New Tax Regime

Deciding between the old and new tax regimes requires careful consideration. While the new regime offers lower tax rates and a simplified structure, the old regime provides various deductions that may benefit certain taxpayers. Understanding the individual tax situation and preferences is crucial in making the right choice.

Conclusion

The benefits of the new tax regime introduced in Budget 2020, coupled with the amendments made in Budget 2023, offer significant advantages for salaried individuals. However, the decision to opt for the new regime should be based on a comprehensive analysis of individual tax requirements and preferences.

FAQs

  1. What are the key changes in the new tax regime introduced in Budget 2023?
    1. The new tax regime saw an increase in the basic exemption limit, revision of tax slabs, and adjustments to various deductions and rebates.
  2. How does the default regime designation affect taxpayers?
    1. The default regime designation means that if taxpayers do not specify their preference, the TDS calculation will be based on the new tax regime.
  3. What is the significance of Form 10E in tax filing?
    1. Form 10E is essential for individuals seeking tax relief under section 89(1) for arrears. It facilitates the calculation and declaration of arrears for tax filing purposes.
  4. What factors should I consider when deciding between the old and new tax regimes?
    1. Factors such as income level, eligibility for deductions, and personal preferences should be considered when choosing between the old and new.

Benefits of New Tax Regime for Salaried Individuals as per Budget 2024 with Automatic Arrears Relief Calculator U/s 89(1) with Form 10E for the F.Y.2024-25

Benefits of New Tax Regime for Salaried Individuals as per Budget 2024 with Automatic Arrears Relief Calculator U/s 89(1) with Form 10E for the F.Y.2024-25
Benefits of New Tax Regime for Salaried Individuals as per Budget 2024 with Automatic Arrears Relief Calculator U/s 89(1) with Form 10E for the F.Y.2024-25