If you are getting ready to file your income tax return for the financial year 2024–25, there are some big changes you should know. The government made new tax rules in the Union Budget 2024. These rules include new income tax slabs and updated capital gains tax rates. Knowing about these changes can help you choose the right tax option and maybe even save some money.
Under the new tax system, people who earn up to ₹12 lakh in a year will not have to pay any income tax. They will get a full tax rebate. But if you earn more than ₹12 lakh, your income will be taxed in different steps or “slabs.” The first ₹4 lakh will not be taxed. The next ₹4 lakh (from ₹4 to ₹8 lakh) will be taxed at 5%. The next ₹4 lakh (from ₹8 to ₹12 lakh) will be taxed at 10%. Then, income from ₹12 to ₹16 lakh will be taxed at 15%. If you earn more than ₹16 lakh, the tax will increase further, but the exact details depend on your income.
The old tax system may still be useful for people who can claim big deductions. For example, if you pay home loan interest and can claim up to ₹2 lakh under Section 24(b), or if you get a large House Rent Allowance (HRA), then the old system may save you more money. But for most people, the new system might be simpler and cheaper.
Capital gains tax has also changed. If you sell shares, mutual funds, or property, these changes matter. Long-term capital gains (when you hold an asset for more than a year) are now taxed at 12.5%, which is higher than the earlier rate of 10% for stocks. Short-term gains (for assets like stocks held less than a year) will now be taxed at 20%, up from 15%. The good news is that the tax-free limit for long-term gains on stocks and equity mutual funds has gone up from ₹1 lakh to ₹1.25 lakh.
If you sell real estate, you will now pay 20% tax on long-term gains, but the earlier benefit called “indexation” has been removed for properties bought after April 1, 2001.
One more change is for private sector employees. If you use the new tax system and your employer puts money into your NPS (National Pension Scheme), you can now get a tax benefit on up to 14% of your basic salary. Earlier, this limit was only 10%.
So, before you file your return, check which tax system works best for you. Look at your income, deductions, and savings to make the smart choice.