The Income Tax Act 2025- Everything You Need to Know Before Filing for Income Tax FY24-25

by Ashiana / December 2, 2024 / 5884 views/ Reading Time: 4 minutes

With the financial year 2024-25 underway, understanding the nuances of the Income Tax Act 2025 becomes vital for every taxpayer. Filing income tax returns ensures compliance with legal requirements and allows you to optimize your financial planning. As the government frequently revises income tax provisions, exemptions, and deductions, staying informed about these changes can significantly affect your tax liability.

The Income Tax Act 2025- Everything You Need to Know Before Filing for Income Tax FY24-25

The Income Tax Act 2025- Everything You Need to Know Before Filing for Income Tax FY24-25

Here’s a detailed guide to help you navigate the process of filing your income tax returns for FY 24-25 efficiently.

Income Tax Slabs for FY 24-25

The foundation of income tax calculations lies in tax slabs, which specify the rate of taxation based on an individual’s income. For FY 24-25, the government offers two regimes for taxpayers to choose from:

1. Old Tax Regime:

Retains multiple exemptions and deductions.

2. New Tax Regime:

Provides lower tax rates but removes most exemptions and deductions.

Let’s take a closer look at the slabs under both regimes.

Income Tax Regime Slabs FY 24-25

Income Range (₹)	Old Tax Regime	New Tax Regime
Up to ₹2,50,000	Nil	Nil
₹2,50,001 to ₹3,00,000	5%	Nil
₹3,00,001 to ₹5,00,000	5%	5%
₹5,00,001 to ₹6,00,000	20%	5%
₹6,00,001 to ₹9,00,000	20%	10%
₹9,00,001 to ₹10,00,000	20%	15%
₹10,00,001 to ₹12,00,000	30%	15%
₹12,00,001 to ₹15,00,000	30%	20%
Above ₹15,00,000	30%	30%

Key Points to Note:

Rebate under Section 87A:

Old Regime: Available for taxable income up to ₹5,00,000, making tax liability nil.
New Regime: Available for taxable income up to ₹7,00,000, making tax liability nil.

Deductions and Exemptions:

Old Regime: Allows deductions such as Section 80C, 80D, HRA, and more.
New Regime: No deductions or exemptions, except for a ₹50,000 standard deduction for salaried individuals and pensioners.

This comparison simplifies choosing the right regime based on your income and financial planning preferences.

Deductions and Exemptions Under the Old Regime

The old tax regime remains popular among taxpayers who invest strategically to claim deductions. Here’s a list of the most common deductions:

1. Section 80C:

Offers deductions up to ₹1,50,000 for investments in instruments like PPF, ELSS, NSC, fixed deposits, and repayment of the principal component of home loans.

2. Section 80D:

Allows deductions on health insurance premiums:

Up to ₹25,000 for individuals below 60 years.
Up to ₹50,000 for senior citizens.

3. House Rent Allowance (HRA):

Beneficial for salaried individuals living in rented accommodations. The amount depends on basic salary, rent paid, and location.

4. Section 24(b):

Deduction of up to ₹2,00,000 on the interest component of home loans for self-occupied properties.

5. Section 80E:

Deduction on the interest paid on education loans for higher studies.

These deductions can substantially reduce taxable income, making the old regime attractive for taxpayers with significant eligible expenses.

Also read: Income Tax Deductions List – 80C & 80D – FY 2023-24

Key Changes in the Income Tax Act 2025

The government has introduced several updates for FY 24-25 that taxpayers need to be aware of:

1. Standard Deduction:

Salaried individuals and pensioners can now claim a ₹50,000 standard deduction under the new tax regime.

2. Enhanced Rebate Limit:

Under the new regime, Section 87A now provides a rebate for individuals with taxable income up to ₹7,00,000. This makes the new regime particularly beneficial for middle-income earners.

3. Simplified ITR Filing:

Pre-filled Income Tax Return (ITR) forms are available to make the filing process more efficient. These forms include information on salary, TDS, and other financial data, reducing manual effort and errors.

Also read: 6 Ways to Save on Your Income Tax in 2024-25

Choosing the Right Tax Regime

Selecting the appropriate tax regime depends on your financial situation, including income sources, investment habits, and eligible deductions.

When to Choose the Old Regime:

If you have substantial investments and expenses eligible for deductions, such as home loans, life insurance premiums, or medical insurance.
For individuals comfortable managing exemptions and deductions.

When to Opt for the New Regime:

If you prefer a hassle-free process with lower tax rates and minimal paperwork.
For those with fewer investments or deductions.

Illustration:

Let’s consider an individual earning ₹12,00,000 annually:

Under the old regime, with deductions worth ₹2,50,000, taxable income is ₹9,50,000. The tax liability would be lower after applying deductions.
Under the new regime, the taxable income remains ₹12,00,000. However, the lower tax rates balance out the absence of deductions.

Taxpayers should calculate their tax liability under both regimes before making a decision.

Important Dates for Filing ITR FY 24-25

Mark your calendar with these key dates to avoid penalties:

Start of filing period: April 1, 2025
Deadline for individuals: July 31, 2025
Deadline for audit cases: October 31, 2025

Late filing attracts penalties under Section 234F, ranging from ₹1,000 to ₹5,000, depending on the delay.

Tips for Seamless ITR Filing

1. Verify Form 26AS and AIS:

Cross-check your income and TDS details to ensure accuracy.

2. Organize Investment Proofs:

Maintain documentation for deductions like Section 80C and 80D to avoid discrepancies.

3. Choose the Right ITR Form:

Different forms cater to varied income sources.

4. File Early:

Avoid last-minute rushes and ensure error-free submission.

Conclusion

The Income Tax Act 2025 brings both opportunities and responsibilities for taxpayers. By understanding the new and old tax regimes, evaluating changes, and filing your returns on time, you can effectively manage your finances and comply with tax laws. Choose the regime that aligns with your financial goals, plan investments wisely, and leverage deductions to minimize your tax liability.

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The Income Tax Act 2025- Everything You Need to Know Before Filing for Income Tax FY24-25