FY25 income tax regulations: six suggestions for salaried taxpayers

In the forthcoming financial year (FY25), there have been no adjustments made to the existing income tax laws, implying that the regulations in place from the previous year will persist. Taxpayers are required to make a choice between adhering to the old or new tax regimes concerning Tax Deducted at Source (TDS) on their salary. By default, individuals will be subjected to the new regime unless they specify otherwise to their employer. 

Under the new tax regime, all taxpayers are entitled to an exemption on income up to Rs 3 lakh. On the other hand, the exemption limit varies depending on the age group under the old regime: Rs 2.5 lakh for individuals under 60 years, Rs 3 lakh for seniors aged 60-80, and Rs 5 lakh for super seniors aged 80 and above.

Both tax regimes offer rebates under Section 87A, resulting in zero tax liability if the net taxable income remains below a certain threshold. The new regime provides a higher rebate, up to Rs 25,000 for incomes up to Rs 7 lakh, while the old regime offers up to Rs 12,500 for incomes up to Rs 5 lakh.

When it comes to deductions and exemptions, the old regime provides more options compared to the new regime. For instance, taxpayers can avail deductions under Section 80C for investments, Section 80D for health insurance, and deduction on home loan interest. In contrast, the new regime offers fewer deductions, including a standard deduction of Rs 50,000 and Section 80CCD (2) for NPS contributions.

It's crucial for taxpayers who wish to opt for the old tax regime to file their Income Tax Returns (ITR) before the July 31 deadline. Late filing will result in taxation based on the new regime. 

Under the new tax regime, high-income earners will face a reduced surcharge rate of 25%, compared to the 37% surcharge rate applicable in the old regime for incomes over Rs 5 crore.

The income tax slabs under the new regime are structured based on income levels, ranging from 0% to 30%. Understanding these regulations is essential for individuals to effectively plan their finances in the upcoming fiscal year.