April 1 signals the commencement of the new financial year, FY2024-25. All the updated regulations for the income tax regime as outlined in the Union Budget will come into effect from this date. Finance Minister Nirmala Sitharaman announced the interim Budget in February, which will be effective from FY25. Here is a compilation of some updated rules pertaining to the tax regime, National Pension System (NPS), Employees’ Provident Fund Organisation (EPFO), insurance, and mutual funds (MFs), among other areas.
Tax Slab:
As per the interim Budget, the income tax slabs remain unchanged for the new financial year, FY2024-25, in line with those of FY2023-24. Income ranging from Rs zero to Rs 3,00,000 will be exempted from tax. The income slab from Rs 3,00,001 to Rs 6,00,000 will be taxed at 5 percent, Rs 6,00,001 to Rs 9,00,000 at 10 percent, Rs 9,00,001 to Rs 12,00,000 at 15 percent, Rs 12,00,001 to Rs 15,00,000 at 20 percent, and Rs 15,00,000 and above at 30 percent. The Budget introduces a new tax regime as the default tax structure. However, taxpayers have the choice to opt for either the new tax regime or the old one.
Advantages of the New Tax Regime:
- No requirement to maintain records of travel and rent receipts.
- The basic exemption limit has been raised from Rs 2.5 lakh to Rs 3 lakh.
- The taxable limit has been increased to Rs 7 lakh from Rs 5 lakh.
- Surcharge rates have been reduced from 37 percent to 25 percent, applicable to taxpayers with income exceeding Rs 5 crore.
Life Insurance Policies:
As per the Union Budget 2023, under the new tax regime, the proceeds from life insurance policies will be taxable if the annual premium paid exceeds Rs 5 lakh in a year.
E-Insurance:
The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that digitization of insurance policies will be compulsory from April 1, 2024. This mandate will encompass all insurance categories, including life, health, and general insurance, requiring policies to be issued electronically.
