Finance Ministry issues clarification regarding new tax regime amidst misinformation on social media

The Finance Ministry has issued a clarification amidst the circulation of misleading information on social media platforms regarding the new tax regime. It clarifies that there are no new changes taking effect from April 1, 2024.

Taxpayers can choose between the old and new tax regimes based on their preferences and financial circumstances, with the option to opt out of the new regime until filing their return for Assessment Year 2024-25. Eligible individuals without business income can alternate between the old and new regimes for each financial year.

On the social media platform, the Finance Ministry posted: “It has come to notice that misleading information related to the new income tax regime is being spread on some social media platforms. It is therefore clarified that:

1)There is no new change which is coming in from 01.04.2024.

2)The new tax regime under section 115BAC(1A) was introduced in the Finance Act 2023, as compared to the existing old regime (without exemptions) (SEE TABLE BELOW)

3)The new tax regime is applicable for persons other than companies and firms, is applicable as a default regime from the Financial Year 2023-24 and the Assessment Year corresponding to this is AY 2024-25.

4)Under the new tax regime, the tax rates are significantly lower, though the benefit of various exemptions and deductions, other than the standard deduction of Rs. 50,000 from salary and Rs. 15,000 from a family’s pension is not available, as in the old regime.

5)The new tax regime is the default tax regime, however, taxpayers can choose the tax regime (old or new) that they think is beneficial to them.

6)The option for opting out from the new tax regime is available till the filing of return for the AY 2024-25. Eligible persons without any business income will have the option to choose the regime for each financial year. So, they can choose a new tax regime in one financial year and an old tax regime in another year and vice versa.

Also Watch: Budget 2024: Tax rebate likely to be hiked to Rs 7.5 lakh under new income tax regime

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