Income Tax: Tax Guidelines for Salaried Individuals and Tips for Managing Your Finances in FY25

 Tax Guidelines for Salaried Individuals and Tips for Managing Your Finances in FY25

As the new financial year 2024-25 begins on April 1, 2024, it's important for people who earn a salary to know about important income tax (I-T) rules. This helps them manage their money well. Here are some important I-T rules you should know and follow to make tax filing and financial planning easier.

Choosing Tax Rules

Salaried workers have to decide whether to go with the old or new tax rules for TDS (Tax Deducted at Source) on their salary. If they don't tell their employer their choice, the employer will deduct tax based on the new rules by default.

Exemption Amounts

The amount of money you can earn without paying taxes differs between the old and new tax rules. Right now, under the new rules, individuals can earn up to Rs 3 lakh without paying taxes. However, under the old rules, this limit changes depending on how old you are.

I-T Slabs

New Regime

0% tax on income up to Rs 3,00,000

5% tax on income from Rs 3,00,001 to Rs 6,00,000

10% tax on income from Rs 6,00,001 to Rs 9,00,000

15% tax on income from Rs 9,00,001 to Rs 12,00,000

20% tax on income from Rs 12,00,001 to Rs 15,00,000

30% tax on income above Rs 15,00,000

Old Regime

0% tax on income up to Rs 2,50,000

5% tax on income from Rs 2,50,001 to Rs 5,00,000

20% tax on income from Rs 5,00,001 to Rs 10,00,000

30% tax on income above Rs 10,00,000

No Tax for Either Rule

Both the new and old tax rules give a tax rebate under Section 87A. This means you don't have to pay any tax if your taxable income is below a certain limit. It's important to know that the new rule gives a bigger tax rebate than the old one.

Deductions and Things You Don't Pay Tax On

Both sets of rules allow for deductions and exemptions, but the old rules cover more things. These include deductions for things like investments under Section 80C, medical insurance under Section 80D, contributions to NPS under Section 80CCD (1B), interest on home loans, interest on education loans, and donations. In contrast, the new rules offer fewer deductions. They mainly include a standard deduction of Rs 50,000 and a deduction for NPS contributions under Section 80CCD (2).

Filing Taxes on Time

If you want to use the old tax rules when filing your income tax return, you need to submit it before the deadline on July 31st. Choosing the old rules depends on filing your tax return on time.

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