Finance Ministry announces changes to income tax slabs effective today

The Finance Ministry has issued a clarification to address the spread of misleading information on social media platforms regarding the new tax regime. Contrary to rumors, there are no new changes coming into effect from April 1, 2024. Taxpayers have the freedom to choose between the old and new tax regimes based on their preferences and financial situations. They can even opt out of the new regime until filing their return for Assessment Year 2024-25.

The new tax regime, introduced under section 115BAC(1A) in the Finance Act 2023, offers lower tax rates but does not provide the benefit of various exemptions and deductions available in the old regime. However, eligible individuals without business income can switch between the old and new regimes for each financial year.

Under the new tax regime, income tax slabs are structured as follows:
– Income from ₹0 to ₹3,00,000: 0% tax rate
– Income from ₹3,00,001 to ₹6,00,000: 5%
– Income from ₹6,00,001 to ₹9,00,000: 10%
– Income from ₹9,00,001 to ₹12,00,000: 15%
– Income from ₹12,00,001 to ₹15,00,001: 20%
– Income above ₹15,00,000: 30%

In comparison, the old tax regime exempts income up to ₹2.5 lakh from taxation and taxes income between ₹2.5 to ₹5 lakh at a rate of 5%. Personal income from ₹5 lakh to ₹10 lakh is taxed at 20% under the old regime, while income above ₹10 lakh is taxed at 30%.

The Finance Ministry urges taxpayers to be cautious of misinformation and make informed decisions regarding their tax regime choice.