National Desk, 23rd July: Union Finance Minister Nirmala Sitharaman has introduced a wide-ranging set of income-tax reforms for the fiscal year 2024-25, aimed at simplifying tax laws, encouraging compliance, and stimulating economic growth. Sitharaman highlighted the success of the simplified corporate tax regime, which accounted for 58 percent of corporate tax revenue in the 2022-23 fiscal year. Notably, two-thirds of personal tax filers have opted for the new tax regime.
The government is also conducting a comprehensive review of the Income Tax Act, expected to be completed within the next six months, which could result in significant changes to the tax framework.
Key Features of the Income-Tax Reforms:
Revised Personal Income Tax Slabs:
- Nil tax rate for incomes up to Rs 3 lakh.
- 5 percent tax rate for incomes between Rs 3-7 lakh (previously applied to Rs 3-6 lakh).
- 10 percent tax rate for incomes between Rs 7-10 lakh (previously applied to Rs 6-9 lakh).
- 15 percent tax rate for incomes between Rs 10-12 lakh (previously applied to Rs 9-12 lakh).
- 20 percent tax rate for incomes between Rs 12-15 lakh (unchanged).
- 30 percent tax rate for incomes above Rs 15 lakh (unchanged).
Increased Standard Deduction:
- Raised from Rs 50,000 to Rs 75,000.
Enhanced Family Pension Deduction:
- Increased from Rs 15,000 to Rs 25,000.
Higher Deduction Limit for Pension Contributions:
- The deduction rate under section 80CCD for employer contributions has been increased from 10 percent to 14 percent of the employee’s salary. Non-government employees in the new tax regime can now claim a deduction up to 14 percent of their salary, an increase from the previous limit.
These reforms are designed to provide taxpayers with greater relief, promote compliance, and enhance economic participation. The changes reflect the government’s commitment to fostering a more efficient and equitable tax system.
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