Income Tax Changes in 2024: What You Need to Know for ITR Filing in 2025

As 2024 comes to an end, India’s financial sector has seen several important income tax changes. These changes, introduced in the Union Budget 2024-25 and refined in July 2024, will impact the deductions and exemptions taxpayers can claim when filing their income tax returns (ITR) in July 2025.

1. Revised Tax Slabs under the New Regime

The new tax regime has launched revised tax slabs that may help taxpayers save up to ₹17,500 annually.

New Tax Slab Rates:

• Up to ₹3 lakh: Nil
• ₹3 lakh to ₹7 lakh: 5%
• ₹7 lakh to ₹10 lakh: 10%
• ₹10 lakh to ₹12 lakh: 15%
• ₹12 lakh to ₹15 lakh: 20%
• Above ₹15 lakh: 30%

2. Standard Deduction Increase

The government has raised the standard deduction limit under the new tax regime:

• From ₹50,000 to ₹75,000
• For family pensioners, from ₹15,000 to ₹25,000

3. No Change in the Old Regime

The old tax regime remains unchanged, including the standard deduction limit.

Old Tax Slab Rates:

• Up to ₹2.5 lakh: Nil
• ₹2.5 lakh to ₹5 lakh: 5%
• ₹5 lakh to ₹10 lakh: 20%
• Income above ₹10 lakh: 30%

4. Changes in Capital Gains Tax

• Short-term capital gains tax increases from 15% to 20%.
• Long-term capital gains tax rises from 10% to 12.5%.
• The tax-free limit for long-term capital gains is raised from ₹1 lakh to ₹1.25 lakh.

5. Higher Securities Transaction Tax (STT)

Traders in equity derivatives (F&O) will face higher STT rates:

• STT on options will increase from 0.0625% to 0.1%.
• STT on futures will rise from 0.0125% to 0.02%.

6. Tax Changes for Share Buybacks

Starting October 1, 2024, share buyback proceeds will be taxed as income for individual shareholders, like dividends, and taxed at the applicable income tax slab rates.

7. Changes to Indexation Benefit

For property sales, long-term capital gains tax will now be charged at 12.5% without the indexation benefit, which was previously 20%. This change may increase the tax burden for long-term real estate investors.

8. Changes in Tax Deducted at Source (TDS)

Several TDS changes were announced:

• The 5% TDS rate on various payments will be merged into a 2% rate.
• The 20% TDS on mutual fund/UTI repurchases will be withdrawn.
• The TDS rate for e-commerce operators will decrease from 1% to 0.1%.
• TCS will be creditable against TDS on salaries.
• Delays in TDS settlement will no longer be criminalised if paid by the filing deadline.

9. Reopening of Assessments

Assessments can be reopened for up to 5 years after the relevant assessment year, but only if the escaped income exceeds ₹50 lakh.

10. Vivad se Vishwas Scheme

The government introduced the Vivad se Vishwas Scheme in Budget 2024 to resolve pending income tax disputes. Taxpayers can pay the disputed tax amount along with a specified percentage to close disputes and avoid additional penalties and interest.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.