• UGI USER
  • Jul 24, 2024
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“GOVERNMENT INCREASES STANDARD DEDUCTION, ADJUSTS NEW TAX SLABS”

Why in the news?

  • The standard deduction under the New Tax Regime (NTR) increased from Rs 50,000 to Rs 75,000.
  • Taxpayers with a taxable income of Rs 15 lakh or more will save Rs 17,500 annually under the NTR due to higher standard deduction and rate rationalisation.
  • Tax slabs adjusted: 5% rate for Rs 3-7 lakh, 10% for Rs 7-10 lakh, and 15% for Rs 10-12 lakh income brackets.
"GOVERNMENT INCREASES STANDARD DEDUCTION, ADJUSTS NEW TAX SLABS" - UPSCsource:midsquare

Key Features of New Tax Regime:

  • Default Option: Becomes the norm if not chosen otherwise.
  • Lower Tax Rates: Offers reduced rates compared to the old regime.
  • No Deductions: Most deductions and exemptions under sections like 80C, 80D, 24(b) are not claimable.
  • Simplified Structure: Aims to simplify and make the tax system user-friendly.
  • Few Allowed Deductions: Some deductions are permitted.
About Old Tax Regime Deductions and Exemptions:

  • Section 80C: Investments in Provident Fund, PPF, NSC, etc.
  • Section 80D: Medical insurance premium payments.
  • Section 24(b): Home loan interest.
  • Standard Deduction: Fixed deduction from salary/pension income.
  • House Rent Allowance (HRA): Exemption for rent allowance received by salaried individuals.

What is Tax?

  • Taxes in India increase costs of transactions, goods, and services.
  • Imposed on corporate profits and worker income by the government.
  • Funds raised support commercial endeavours to boost the economy and improve living standards.
  • The Indian Constitution empowers State and Central governments to levy taxes.
  • All taxes must be backed by laws from the State Legislature or Parliament.

Types of Taxes in India

  • Direct Taxes
  • Indirect Taxes

Associated Article:

https://universalinstitutions.com/indian-taxation-system/