Several significant changes to the Income Tax Act have been introduced vide Finance Act 2024, which will impact the taxpayer’s Income Tax Return (ITR) filing in 2025 as follows based on an interview with CA (Dr.) Suresh Surana.

Revised Income Tax Slabs Under the New Tax Regime:

The government has updated the income tax slabs for the new tax regime to provide more savings for individual taxpayers. The new slabs for FY 2024-25 are as follows:

Old Tax Slabs	New Tax Slabs	Tax Rates
Upto Rs. 3,00,000	Upto Rs. 3,00,000	Nil
Rs. 3,00,000 to Rs. 6,00,000	Rs. 3,00,000 to Rs. 7,00,000	5%
Rs. 6,00,000 to Rs. 9,00,000	Rs. 7,00,000 to Rs. 10,00,000	10%
Rs. 9,00,000 to Rs. 12,00,000	Rs. 10,00,000 to Rs. 12,00,000	15%
Rs. 12,00,000 to Rs. 15,00,000	Rs. 12,00,000 to Rs. 15,00,000	20%
Above Rs. 15,00,000	Above Rs. 15,00,000	30%

Increased Standard Deduction Limit:

For individuals opting for the new tax regime, the standard deduction has been increased from Rs. 50,000 to Rs. 75,000. Additionally, the limit for family pensioners has been raised from Rs. 15,000 to Rs. 25,000. It is pertinent to note that there are no revisions for the standard deduction limit under the old tax regime for FY 2024-25.

Enhanced Deductions for Employer Contributions to NPS:

Under the new tax regime, the deduction limit for employer contributions to the National Pension System (NPS) has been increased from 10% to 14% of the basic salary. This deduction, claimed under Section 80CCD(2) of the Income Tax Act,1961 (hereinafter referred to as ‘the IT Act’) is one of the few deductions permitted under the new regime in addition to the standard deduction.

Changes in Long-Term Capital Gains Tax Rates:

The rate of long-term capital gains derived from the transfer of capital assets (such as listed equity shares subject to STT, units of equity-oriented fund and business Trust) has been revised from 10% to 12.5%. Simultaneously, the applicable exemption threshold of Rs. 1 lakh has been enhanced to Rs.1.25 lakh for long-term capital gains under section 112A.

Changes in the Short Term Capital Gains Tax Rates:

The tax rate for short-term capital gain under provisions of section 111A of the Act on STT-paid equity shares, units of equity-oriented mutual fund and units of a business trust is proposed to be increased to 20% from the present rate of 15%. Other short-term capital gains shall continue to be taxed at the applicable slab rate.

Changes in the Capital Gains Tax rate for Immovable property:

For immovable property, the rate of tax on long term capital gain has been reduced to 12.5% as against 20% earlier. However, no benefit of indexation is available in such cases. The period of holding for long term capital gain shall continue to be 24 months.

Further, resident individual taxpayers or Hindu Undivided Family would be provided with an option to opt for taxing such capital gains at 12.5% without claiming the benefit of indexation or at 20% post claiming the benefit of indexation, whichever is more beneficial w.r.t. long term capital gains arising on land or building or both which are purchased or acquired before 23rd July 2024.