Crucial Insights on Upcoming Tax Revolution from April 1: A Must-Know Guide- Check It Out!

Finance Minister Unveils Income Tax Revolution: New Default System to Kick in from April 1, 2024

Finance Minister Announces Default Adoption of New Tax System with Lower Rates, Effective April 1, 2024

The Finance Minister Nirmala Sitharaman announced modifications to the Income Tax laws in February, and they would take effect on April 1, 2024, which is the start of the next fiscal year. The primary modification is that individuals will now utilize the new tax system by default. Though it offers fewer deductions and exemptions, this system’s lower tax rates encourage people to pick it and are intended to make filing taxes easier. But if the previous method works better for them, they are free to continue using it.

The following are some notable changes: the basic exemption limit was raised to Rs 3 lakh from Rs 2.5 lakh as of April 1, 2023, meaning that if your income is up to Rs 7 lakh, you won’t have to pay any tax under this system. The new tax system has different tax rates based on income, starting at 5% for incomes between Rs 3 lakh and Rs 6 lakh and going up to 30% for incomes above Rs 15 lakh.

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Crucial Insights on Upcoming Tax Revolution from April 1: A Must-Know Guide- Check It Out!(PHOTO: IndiaTimes)

Taxation on Life Insurance Maturity, Reduced High-Income Tax Rate, and Standard Deduction Extension

Additional modifications include taxing the maturity proceeds of some life insurance plans issued after April 1, 2023, lowering the additional tax rate for extremely high incomes, and providing a standard deduction of Rs 50,000 to both the existing and new tax systems. Additionally, the maximum amount that non-government workers can cash out of tax-free leave now stands at Rs 25 lakh.

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