Income Tax Rules: 5 Major Changes in the Last 6 Months Every Taxpayer Should Know

Summary:

1. Revised Tax Slabs under the new tax regime.
2. Increased Standard Deduction for salaried and retired individuals.
3. Enhanced benefits on NPS Contributions.
4. Changes in Capital Gains Tax rates and exemptions.
5. Implementation of Tax Collection at Source (TCS) on luxury goods over ₹10 lakh.

Key Changes in Detail:

1. New Tax Slabs:
   • Revamped slabs for better relief:
     • ₹0–3 lakh: 0% tax
     • ₹3–6 lakh: 5%
     • ₹6–9 lakh: 10%
     • ₹9–12 lakh: 15%
     • ₹12–15 lakh: 20%
     • Above ₹15 lakh: 30%
   • Impact: Middle-income taxpayers could save up to ₹17,500.
2. Increased Standard Deduction:
   • Raised from ₹50,000 to ₹75,000.
   • For family pensioners: Raised from ₹15,000 to ₹25,000.
   • Impact: Significant relief to salaried individuals and retirees.
3. Additional NPS Deductions:
   • Employer contribution deduction increased from 10% to 14%.
   • Impact: Encourages better retirement savings for employees.
4. Changes in Capital Gains Tax:
   • Short-term Capital Gains (STCG): Increased from 15% to 20%.
   • Long-term Capital Gains (LTCG): Increased from 10% to 12.5%.
   • LTCG exemption limit: Raised from ₹1 lakh to ₹1.25 lakh.
   • Impact: Promotes long-term investments.
5. TCS on Luxury Goods:
   • Applicable on goods valued over ₹10 lakh since January 1, 2025.
   • Impact: Helps track high-value transactions and curb tax evasion.

Overall Impact:

• Middle-Class Relief: More disposable income for middle-income groups.
• Boost to New Tax Regime: Incentivizes taxpayers to shift to the revamped system.
• Encouraged Long-Term Investments: With revised LTCG benefits.
• Enhanced Financial Tracking: Monitoring big-ticket transactions through TCS.

Tax Planning Tips:

• Evaluate Tax Regime Options: Weigh the benefits of the old versus the new tax regime based on your finances.
• Invest in NPS: Leverage increased employer contribution deductions.
• Prioritize Long-Term Investments: Benefit from revised LTCG exemptions.
• Track Luxury Expenses: Consider the TCS impact on purchases over ₹10 lakh.

Conclusion:
While the last budget focused on reforms under the new tax regime, taxpayers following the old system hope for similar benefits in the upcoming Budget 2025-26. Stay tuned as FM Nirmala Sitharaman unveils what lies ahead for all taxpayer categories on February 1, 2025.