9 Income Tax Changes in 2024: What You Need to Know for Filing ITR in 2025

The year 2024 has ushered in substantial income tax reforms aimed at simplifying tax compliance and enhancing taxpayer benefits. These updates affect tax slabs, deductions, capital gains, and more, shaping the way taxpayers will approach filing their Income Tax Returns (ITR) in 2025. Here’s a detailed breakdown of the 9 most significant changes and their implications:
1. Revised Income Tax Slabs Under the New Regime
The new tax regime introduces updated slabs offering relief to individual taxpayers. Here’s the revised structure:
- Income up to ₹3,00,000: Exempt from tax.
- Income from ₹3,00,001 to ₹7,00,000: Taxed at 5%.
- Income from ₹7,00,001 to ₹10,00,000: Taxed at 10%.
- Income from ₹10,00,001 to ₹12,00,000: Taxed at 15%.
- Income from ₹12,00,001 to ₹15,00,000: Taxed at 20%.
- Income above ₹15,00,000: Taxed at 30%.
These changes could save taxpayers up to ₹17,500 annually compared to the previous slabs, making the new regime more attractive for many.
2. Increased Standard Deduction Limit
Under the new regime, the standard deduction limit for salaried individuals has been raised from ₹50,000 to ₹75,000. Family pensioners also benefit, with their deduction increasing from ₹15,000 to ₹25,000. While the old regime retains its existing limits, the higher deductions in the new regime enhance its appeal.
3. Enhanced NPS Deduction for Employer Contributions
The deduction for employer contributions to the National Pension System (NPS) has been increased from 10% to 14% of the basic salary under the new regime. However, contributions exceeding ₹7.5 lakh across EPF, NPS, and superannuation funds remain taxable, balancing benefits within specified limits.
4. Simplified Capital Gains Taxation
Capital gains taxation has undergone simplification:
- Short-Term Capital Gains (STCG): Tax rate increased from 15% to 20%.
- Long-Term Capital Gains (LTCG): Uniformly taxed at 12.5% for all assets.
While these changes simplify tax calculations, they also limit indexation benefits for certain assets, requiring taxpayers to assess their investment strategies.
5. Claiming TDS and TCS Credit Against Salary
Salaried individuals can now adjust TDS or Tax Collected at Source (TCS) deductions from other income sources against TDS on their salary. This change eases cash flow concerns and increases monthly take-home pay.
6. Changes in TDS on Property Sales
For property sales exceeding ₹50 lakh, TDS is now applicable on the entire sale value, regardless of individual sellers’ shares. This measure improves compliance and prevents TDS evasion.
7. Vivad Se Vishwas Scheme 2.0
The reintroduced Vivad Se Vishwas Scheme offers taxpayers an opportunity to resolve tax disputes amicably. By settling ongoing cases, this scheme reduces uncertainties and streamlines dispute resolution processes.
8. Aadhaar Mandatory for ITR and PAN Applications
Effective October 2024, Aadhaar is mandatory for filing ITR and applying for PAN. Aadhaar enrolment numbers will no longer be accepted, necessitating action from those without Aadhaar to avoid delays.
9. Reduced Time Limit for Old ITR Revisions
The time frame for reopening old ITRs has been shortened to five years for cases involving income escaping assessments above ₹50 lakh. This change aims to minimise prolonged litigation and provide greater certainty for taxpayers.
Implications for Filing ITR in 2025
These tax reforms emphasize simplification, compliance, and savings. Taxpayers should carefully evaluate the old versus new regimes to determine the best fit for their financial situation. Key takeaways include:
- Optimizing Savings: Leverage increased deductions and revised slabs.
- Simplified Compliance: Benefit from streamlined processes like rationalised TDS rates.
- Strategic Planning: Reassess investment portfolios in light of revised capital gains rules.
Conclusion
The 2024 income tax changes present both opportunities and challenges for taxpayers. By staying informed and proactive, individuals and businesses can maximize their benefits while ensuring compliance. Partnering with a professional accounting firm like Clearbiz can further ease this transition, ensuring you’re well-prepared for the 2025 ITR filing season.