After Interim Budget 2024, how will income be taxed? Any changes?

Ans: For senior citizen specifically no new benefits are announced. However, Senior citizen can take benefit of revised rate of tax under new tax regime and if income is upto 7 lacs, senior citizen can also take benefit of 100% rebate of tax.

Ans: The below are the types of deductions you can claim under the old tax regime -

1. Investment in PPF/NSC/ Insurance: INR 150000
2. Mediclaim - depending upon self and / or dependents : INR 25000 / INR 50000 or INR 75000 (incase either parent is a senior citizen)
3. Interest on savings bank account interest to the extent of INR 10000
4. You can claim housing rent allowance from your salary income incase you live on rent.
5. Other deductions depend upon whether you have housing loan or education loan etc.
6. Investment in National Pension scheme : INR 50000

Please consult your CA before moving ahead.

Ans: In the Union Budget 2025, the Indian government introduced changes to the income tax structure. The new tax regime now offers a basic exemption limit of Rs. 4,00,000. Individuals earning up to Rs. 12,00,000 annually are eligible for a rebate under Section 87A, which effectively brings their tax liability to zero.

Addressing Your Concern

You mentioned that the tax slabs should begin from Rs. 12,00,000, given the exemption up to Rs. 12,00,000.However, the tax slabs are designed to follow a progressive system. The initial slab of Rs. 0 to Rs. 4,00,000 ensures tax relief for lower-income groups.

Additionally, the Rs. 12,00,000 limit is specifically available as a rebate for income from salary and business/professional sources only. For individuals earning other income (such as rental income, capital gains, etc.), the tax will apply starting from Rs. 4,00,000. This is why the slab starts from Rs. 0 to Rs. 4,00,000.

Thus, the tax liability structure is based on the source of income, with the rebate applicable only for salary and business/professional income. The objective is to provide targeted relief to salaried individuals and small businesses while still taxing other types of income starting from Rs. 4,00,000.

Mandatory Income Tax Return Filing

As per Budget 2025, the requirement to file an Income Tax Return (ITR) remains unchanged. Individuals whose total income exceeds the basic exemption limit (Rs. 4,00,000) are required to file an ITR. Even if your income is below the taxable limit, filing an ITR can be advantageous for reasons like claiming refunds, applying for loans, or proving your income for future financial planning.

Final Insights

The revised tax slabs aim to provide relief to those with lower incomes while ensuring a fair contribution from all income groups. The structure encourages compliance and simplifies the tax process for salaried and small-business earners, while still ensuring taxes on other sources of income.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment