How FY 2024-25 Tax Changes Affect Your ITR Filing

Revised Income Tax Slabs Under the New Tax Regime

The government has updated the income tax slabs for the new tax regime, aiming to provide more savings for individual taxpayers in FY 2024-25.

2025: These adjustments will enable taxpayers to save as much as Rs 17,500 in a financial year.

The new income tax slabs for FY 2024-25 are as follows:

Tax Slab for FY 2024-25

Tax Rate

• Up to Rs 3 lakh: NIL
• Rs 3 lakh – Rs 7 lakh: 5%
• Rs 7 lakh – Rs 10 lakh: 10%
• Rs 10 lakh – Rs 12 lakh: 15%
• Rs 12 lakh – Rs 15 lakh: 20%
• Above Rs 15 lakh: 30%

Increased Standard Deduction Limit

Alongside the new income tax slabs, the government has raised the standard deduction limit for those opting for the new tax regime. Individuals can now claim a standard deduction of Rs 75,000, up from Rs 50,000. Furthermore, the limit for family pensioners has been increased to Rs 25,000 from Rs 15,000.

There are no revisions for the standard deduction limit under the old tax regime for FY 2024-25 (AY 2025-26).

2025: This increase in the standard deduction will allow salaried individuals and pensioners to reduce their taxable income significantly, thereby lowering their overall tax liability when opting for the new regime.

Enhanced Deductions for Employer Contributions to NPS

Under the new tax regime for FY 2024-25, individuals can now claim higher deductions on the employer’s contribution to the National Pension System (NPS), with the limit raised to 14% of the basic salary, up from 10%.

This deduction, claimed under Section 80CCD (2) of the Income Tax Act, 1961, is the only deduction permitted under the new regime in addition to the standard deduction.

2025: Individuals who opt for the new tax regime will find greater relief in terms of tax savings compared to previous rules. However, note that if the total employer’s contribution to the Employees Provident Fund (EPF), NPS, and Superannuation fund exceeds Rs 7.5 lakh in a fiscal year, the excess will become taxable.

Revised Tax Rates for LTCG and STCG

The framework for capital gains taxation has been modified starting FY 2024-25 to simplify the calculation.

Key changes include:

• Short-term capital gains (STCG) on equity and mutual funds will now be taxed at 20%, an increase from 15%.
• STCG from other assets will still be taxed according to regular income tax slabs.
• Long-term capital gains (LTCG) on all assets will incur a tax of 12.5%.
• Exemption for LTCG from equity and mutual funds is now up to Rs 1.25 lakh, up from Rs 1 lakh.
• The indexation benefit on LTCG from house property is partially removed, offering two taxable options for sales completed on or before July 22, 2024.

2025: These changes will streamline capital gains calculations, making it easier for individuals to determine their tax liabilities.

Adjusted Holding Periods for Capital Gains Taxation

The government has also revised the holding periods necessary to qualify for long-term versus short-term capital gains.

The new periods are as follows:

• For listed securities, the holding period required for the long-term classification is 12 months.
• For non-listed securities, the period required is 24 months.

2025: These simplified holding periods will make it easier for investors to understand the requisite time for qualifying assets as long-term.

Rationalization of TDS Rates

To address the complexity in TDS rates, the government has streamlined certain rates while keeping others unchanged. Notable rationalizations include:

• Payment of salary remains at normal slab rates.
• Various TDS rates have been adjusted, including those relating to interests and payments to contractors.

Union Budget 2024 New TDS Provisions

Section 194T – Payments to partners of firms

Starting from April 1, 2025, TDS will be applicable on payments made by a firm to its partners. Under Section 194T, if you receive salary, commission, bonus, or interest exceeding Rs. 20,000 in a financial year, the firm must deduct TDS at a rate of 10%. This deduction will occur either when the payment is credited to your account or when the payment is made, whichever comes first. It’s essential for partners to plan their withdrawals carefully, as this new provision will impact cash flow and tax liabilities.

Overview of TDS Rate Chart for the FY 2023-24 and FY 2024-25

Section	Nature of transaction	TDS Rate
192	Payment of salary	Normal Slab Rates
192A	Premature withdrawal from EPF	With PAN: 10%  Without PAN: 20%
193	Interest on securities	10%
194	Payment of any dividend	10%
194A	Interest other than interest from securities (from deposits with banks/post office/co-operative society)Interest from banks/post office/co-operative society	10%
194B	Income from lottery winnings, card games, crossword puzzles etc.	30%
194BA	Income from online games	30%
194BB	Income from horse race winnings	30%
194C	Payment to contractor/sub-contractor:-
	a) Individuals/HUF	1%
	b) Other than Individuals/HU	2%
194D	Insurance commission to:
	a) Domestic Companies	10%
	b) Other than companies	5%
194DA	Insurance pay-out in respect of a life insurance policy	5% (before 1st October 2024) 2% (from 1st October 2024)
194E	Payment to non-resident sportsmen/sports association	20% + surcharge + 4% cess
194EE	Payment of amount standing to the credit of a person under National Savings Scheme (NSS)	10%
194F	Payment for the repurchase of the unit by Unit Trust of India (UTI) or a Mutual Fund	20%
194G	Payments, commission, etc., on the sale of lottery tickets	5% (before 1st October 2024) 2% (from 1st October 2024)
194H	Commission or brokerage	5% (before 1st October 2024) 2% (from 1st October 2024)
194-I	Rent:
	194-I(a) Rent on plant and machinery	2%
	194-I(b) Rent on land/building/furniture/fitting	10%
194-IA	Payment in consideration of transfer of certain immovable property other than agricultural land.	1%
194-IB	Rent payment by an individual or HUF not covered u/s. 194-I	5% (before 1st October 2024) 2% (from 1st October 2024)
194-IC	Payment under Joint Development Agreements (JDA) to Individual/HUF	10
194J	Any sum paid by way of fee for professional services	10%
194J	Any sum paid by way of remuneration/fee/commission to a director	10%
194J	Any sum paid for not carrying out any activity concerning any business;	10%
194J	Any sum paid for not sharing any know-how, patent, copyright, etc.	10%
194J	Any sum paid as a fee for technical services	2%
194J	Any sum paid by way of royalty towards the sale or distribution, or exhibition of cinematographic films	2%
194J	Any sum paid as fees for technical services, but the payee is engaged in the business of operation of the call center.	2%
194K	Payment of any income for units of a mutual fund, for example, dividend	10%
194LA	Payment in respect of compensation on acquiring certain immovable property	10%
194LB	Payment of interest on infrastructure debt fund to Non-Resident	5% + surcharge + 4% cess
194LC	Payment of interest for the loan borrowed in foreign currency by an Indian company or business trust against loan agreement or the issue of long-term bonds	5%
194LC	Payment of interest for the loan borrowed in foreign currency by an Indian company or business trust against the issue of long-term bonds listed in IFSC	4%
194LD	Payment of interest on bond (rupee-denominated) to FII or a QFI	5%
194LBA(1)	Certain income distributed by a business trust to its unitholder	10%
194LBA(2)	Interest income of a business trust from SPV distribution to its unitholders	5%
194LBA(2)	Dividend income of a business trust from SPV, in which it holds the entire share capital exempt the capital held by the government, and distribution to its unitholders	10%
194LBA(3)	Rental income payment of assets owned by the business trust to the unitholders of such business trust	30%
194LBA(3)	Rental income payment of assets owned by the business trust to the unitholders of such business trust	40%
194LBB	Certain income paid to a unitholder in respect of units of an investment fund	10%
194LBB	Certain income paid to a unitholder in respect of units of an investment fund	40%
194LBC	Income from investment in securitisation fund received to an individual and HUF	25%
194LBC	Income from investment in securitisation fund received to a domestic company	10%
194LBC	Income from investment in securitisation fund received to a foreign company	40%
194LBC	Income from investment in securitisation fund received to NRI	10%
194M	Certain payments by Individual/HUF not liable to deduct TDS under Section 194C, 194H, and 194J	5% (before 1st October 2024) 2% (from 1st October 2024)
194N	Cash withdrawal from a banking company, co-operative society engaged in  the business of banking or a post office:	2%
	Filed ITR during the last three years and cash withdrawal exceeds Rs 3 crore	2%
	In case person has not filed ITR for the last three years           – total cash withdrawn is more than ₹20 lacs and up to ₹3 Crore in a FY           – total cash withdrawn is more than ₹3 Crore is a financial year	– 2%   – 5%
194O	Payment for the sale of goods or provision of services by the e-commerce operator through its digital or electronic facility or platform.	1% (before 1st October 2024) 0.1% (from 1st October 2024)
194P	Payment of pension or interest to specified senior citizens of age 75 years or more	Normal tax slab rates
194Q	Payments for the purchase of goods	0.10%
194R	Perquisite or benefit to a business or profession	10%
194S	TDS on the transfer of virtual digital assets	1%
195	Income on investments made by NRI citizen	20%
195	Income by way of LTCG referred to in section 115E in the case of NRI	10%
195	Income by way of LTCG under section 112(1)(c)(iii)	10%
195	Income by way of LTCG under section 112A	10%
195	Income by way of STCG under section 111A	15%
195	Any other income by way of LTCG	20%
195	Interest payable on money borrowed by the government or Indian concern in foreign currency	20%
195	Income from royalty payable by the Indian concern or the government, for the copyright in a subject referred in the first proviso of section 115A or computer software referred to in the second proviso of section 115A	10%
195	Income from royalty payable by government or Indian concern in pursuance of an agreement on matters included in the industrial policy	10%
195	Income from royalty payable by government or Indian concern in pursuance of an agreement on matters included in the industrial policy   If the agreement for such royalty payment is entered in between 31st March 1961 and 1st April 1976	50%
195	Income from royalty payable by government or Indian concern in pursuance of an agreement on matters included in the industrial policy   If the agreement for such royalty payment is entered after 31st March 1976	10%
195	Income from technical fees payable by government or Indian concern in pursuance of an agreement on matters related to industrial policy	10%
195	Income from technical fees payable by government or Indian concern in pursuance of an agreement on matters related to industrial policy   If the agreement for such payment is entered in between 29th February 1964 and 1st April 1976	50%
195	Income from technical fees payable by government or Indian concern in pursuance of an agreement on matters related to industrial policy   If the agreement for such payment is entered after 31st March 1976	10%
195	Any other income	30%
195	Any other income	40%
196B	Income (including LTCG) from units of an offshore fund	10%
196C	Income (including LTCG) from foreign currency bonds or GDR of an Indian company	10%
196D	Income (excluding dividend and capital gain) from Foreign Institutional Investors.	20%
206AB	Payment to non-filers, i.e. those who have not filed their income tax return in the last year   Budget 2023:   Non filers do not include:   – People who are not required to file their ITRs   – NRs who do not have a PE in India	– 2 times the rate given in the Income Tax Act or Finance Act or   – 5%, whichever is higher
206AA	TDS rate in case of Non availability of PAN	Rates specified above or 20%, whichever is higher

2025: This rationalization is intended to reduce TDS deductions, leaving taxpayers with a higher net income.

Tax Credit Adjustments

Salaried employees can now claim credits for taxes deducted on other income sources against TDS from salary, easing potential cash flow issues. Additionally, the government will allow TCS credits to be claimed by individuals other than the collectee starting January 1, 2025.

Impact in 2025: This provision helps middle-class families manage their budgets better, particularly with educational expenses abroad.

Changes to Share Buyback Taxation

The tax regime regarding share buybacks has changed, requiring individuals to pay tax on proceeds received from buybacks as they would for dividends, taxed at their personal slab rates.

2025: Those within the higher tax brackets (30%) may find their liabilities increase, whereas lower earners could benefit from the change.

Amendment to TDS on Property Transactions

A recent amendment mandates that TDS be deducted based on the total transaction amount exceeding Rs 50 lakh, regardless of how much each seller receives.

2025: This amendment aims to prevent avoidance of TDS obligations during property sales, enhancing compliance within the sector.

Changes in GST Compliance
A number of important changes in GST compliance will come into force beginning January 1, 2025, affecting firms in India.-

1. MFA Mandatory: MFA will become mandatory for all taxpayers. This is to tighten security on GST portals more than ever. For this, update mobile numbers for OTPs, train employees to turn on MFA early, and verify IT system compatibility.
2. E-Way Bill Restrictions: E-Way Bills (EWBs) can only be generated for base documents that are no older than 180 days. To accomplish this, align invoicing and logistics with the 180-day guideline, automate EWB reminders, and coordinate inventory with supply chain teams.

These changes are intended to streamline processes and reduce fraud.