This year’s changes to income tax rules will also impact in 2025

New Delhi|There were many changes in the income tax rules, which are very important for income taxpayers, in the middle of this year. This happened because the government presented the Union Budget-2024 in July due to the general elections to be held between April and June, 2024. Most of the income tax changes announced in July, 2024 are effective from the current fiscal year 2024-25. These changes will also affect the tax deductions and exemptions that can be claimed when filing an Income Tax Return (ITR) in July, 2025. Overall, these will also affect the earnings and savings of income taxpayers.

The government has made changes in the income tax slabs under the new tax system. This change will help employed and other taxpayers save more income tax for FY 2024-25.

To simplify the capital gains tax system, the government has amended the Long Term Capital Gains (LTCG) and Short Term Capital Gains (STCG) rules from FY 2024-25, which are as follows.

The tax rate on short term capital gains derived from equity and equity based mutual funds has been increased by five per cent to 20 per cent.
Long-term capital gains from any asset will be taxed at 12.5 per cent. LTCG rates will not vary for different assets.

LTCGs from equity and equity based mutual funds will get tax exemption up to Rs 1.25 lakh per financial year instead of one lakh.

Under the amended rules, a person can pay tax on long term capital gains arising from the sale of a house in two ways. Provided, the house was purchased on or before July 22, 2024. Tax has to be paid at the rate of 20 per cent with indexation benefit. 12.5% tax to be paid on LTCG without indexation benefit.

If a person opts for the new tax regime for FY 2024-25, he can claim a standard deduction of Rs 70,000 instead of Rs 50,000. Under the new system, the limit of standard deduction has also been increased from Rs 15,000 to Rs 25,000 for family pensioners.

Bearing…An increase in the threshold would help to claim higher reductions. If they opt for the new system, the tax liability will be reduced.