The Finance Minister (FM) has introduced several key changes in the new tax regime aimed at providing relief to the middle class and simplifying the tax structure. The changes include rationalized tax slab rates, an enhanced standard deduction, increased employer contributions to NPS, and modifications to capital gains tax rates. Additionally, there are new rules for TDS, decriminalization of delayed TDS payments, and streamlined reassessment processes. These reforms are designed to improve tax compliance and ease the financial burden on taxpayers.
5 Key Points
- Enhanced Standard Deduction: The standard deduction under the new tax regime has been increased to Rs 75,000, effective from AY 2025-26.
- Increased NPS Contribution: Employer’s contribution to NPS has been raised from 10% to 14% for those opting for the new tax regime.
- Changes in Capital Gains Tax Rates: Short-term capital gains tax on equity-oriented mutual funds and shares increased to 20%, and long-term capital gains tax rate increased to 12.5%.
- Revised TDS Provisions: Several changes to TDS rates and rules, including merging some rates and decriminalizing delays in TDS payment, effective from various dates in 2024 and 2025.
- Streamlined Reassessments: Reassessment can only be initiated beyond 3 years if the escaped income is Rs 50 lakhs or more, with a maximum period of five years.
