The Indian government has made significant changes to the tax rules, bringing relief to lakhs of taxpayers.
As the deadline for filing Income Tax Returns (ITR) approaches, taxpayers can now benefit from the newly introduced rules, which offer exemptions and deductions.
The Finance Minister, Nirmala Sitharaman, announced these measures during the budget, providing taxpayers with opportunities to reduce their tax liabilities and, in some cases, pay zero tax.
New Tax Regime Brings Benefits Starting from the new financial year on April 1st, the government has implemented several tax rule changes to incentivize taxpayers.
Under the new tax regime, individuals can avail of numerous benefits, including the possibility of paying zero tax.
Notably, no tax needs to be paid on incomes up to Rs 7 lakh annually. For individuals with an annual income of Rs 7 lakh or less, this change offers a complete exemption from tax.
Standard Deduction Attracts Taxpayers In a bid to encourage taxpayers to opt for the new tax regime, Finance Minister Nirmala Sitharaman introduced the benefit of standard deduction.
This deduction is aimed at drawing more individuals towards the new tax system instead of the old one.
Under the new tax regime, both salaried class and pensioners can claim a standard deduction of Rs 50,000 annually.
Enhanced Benefits for High-Income Earners Employed individuals earning an annual income of Rs 15.5 lakh or more will enjoy a higher standard deduction of Rs 52,500 in the new tax regime.
Prior to this change, standard deduction benefits were only available under the old tax regime.
However, with this modification, taxpayers opting for the new regime can also take advantage of the standard deduction.
Increased Leave Encashment Exemption Private sector employees can now benefit from an increased leave encashment exemption, which has been raised from Rs 3 lakh to Rs 25 lakh.
This change provides additional relief to employees who receive leave encashment payments, resulting in reduced tax liabilities.
With the implementation of the new tax rules, the government aims to offer significant relief to taxpayers across different income brackets.
Taxpayers can now explore opportunities to reduce their tax burden, with some individuals potentially eligible for complete tax exemption.
By opting for the new tax regime and leveraging the standard deduction and increased leave encashment exemption, taxpayers can ensure maximum tax efficiency and compliance with the revised regulations.