1 April 2024 – Amidst speculation, the Finance Ministry has debunked rumors of a new tax regime coming into effect on April 1. Addressing misinformation, the ministry clarified that there will be no changes to the existing tax system.
The Finance Ministry issued a statement refuting claims circulating on social media regarding the implementation of a new tax system. Emphasizing clarity, the ministry affirmed that the current tax structure remains unchanged.
Comparison of Old and New Tax Regime:
Under the previous tax regime, various deductions and exemptions were available under Sections 80C, 80D, HRA, and LTA. The tax slabs under the old system were as follows:
- Up to Rs 2.5 lakh: No tax
- Above Rs 2.5 lakh to Rs 5 lakh: 5% tax
- Above Rs 5 lakh to Rs 10 lakh: 20% tax
- Above Rs 10 lakh: 30% tax
The Finance Act 2023 introduced a new tax system under Section 115BAC(1A). While the new system offers lower tax rates, it also reduces allowances and deductions available to taxpayers.
Clarification from Finance Ministry:
The ministry underscored the need to dispel misinformation and reiterated that there are no changes to the tax system effective April 1, 2024. It clarified that the new tax regime mentioned in Section 115BAC(1A) will not be implemented at this time.