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In the 2024 Budget, Finance Minister Sitharaman introduced several important changes to the income tax regime for 2025. These changes aim to simplify the tax process and provide relief to taxpayers. Here are the five key updates every taxpayer should know before filing their Income Tax Returns (ITR):
1. Revised Income Tax Slabs
First, the new tax slabs offer more flexibility and benefits. Under the new regime, there is no tax on income up to ₹3 lakh. Then, the tax rates for other income brackets are:
- Income between ₹3 lakh and ₹7 lakh: 5%
- Income between ₹7 lakh and ₹10 lakh: 10%
- Income between ₹10 lakh and ₹12 lakh: 15%
- Income between ₹12 lakh and ₹15 lakh: 20%
- Income above ₹15 lakh: 30%
2. Increased Standard Deduction
Additionally, to further support salaried individuals, the government has increased the standard deduction from ₹50,000 to ₹75,000. This change will help reduce the taxable income for salaried taxpayers, thus providing extra financial relief.
3. Higher Deduction for Family Pensioners
Furthermore, family pensioners will benefit from an increased standard deduction limit. The limit has been raised from ₹15,000 to ₹25,000, offering greater tax savings for those receiving a family pension.
4. Enhanced Benefits under National Pension System (NPS)
Moreover, the new tax regime offers increased benefits for contributions to the National Pension System (NPS) under Section 80CCD (2). The limit for tax-free contributions has been raised from 10% to 14% of the employee’s basic salary. This change encourages greater participation in the NPS and helps taxpayers save more for their retirement.
5. Significant Tax Savings
Lastly, taxpayers opting for the new tax regime can save up to ₹17,500 annually. This amount reflects the combined benefits of the revised tax slabs, increased standard deductions, and enhanced NPS contributions.
As taxpayers prepare to file their ITR for 2025, it is crucial to understand these changes and how they impact their financial planning. The new tax regime aims to make the tax process more straightforward and beneficial, ensuring that taxpayers can maximize their savings and investments.
