Income Tax Rules: The truth is that the rule of exemption from tax on income up to Rs 12 lakh per annum will be applicable from the financial year 2025-26. This means that this decision will not be applicable on the income earned from April 1, 2024 to March 31, 2025.
Income Tax Rules: The season of filing Income Tax Returns (ITR) has begun. More than 1 crore taxpayers have filed their returns. Many taxpayers are trying to find out which of the old and new income tax regimes is beneficial for them. The main reason for this is a big announcement made by the government in the Union Budget 2025. The government had said in the budget presented in February this year that taxpayers with income up to Rs 12 lakh will not have to pay tax. The government had also made changes in the tax slabs of the new regime. Many taxpayers feel that this change has come into effect with immediate effect. But, it is wrong to think so.
Tax exemption rule up to Rs 12 lakh from FY26
The truth is that the rule of exemption from tax on income up to Rs 12 lakh per annum is applicable from the financial year 2025-26. This means that this decision will not be applicable on income earned from April 1, 2024 to March 31, 2025. This year taxpayers will not get the benefit of this tax benefit in filing returns. If you are going to file income tax return, then the old rules of income tax will apply. Chartered Accountant Balwant Jain said, “Taxpayers should look at the benefits of both the new and old regime before filing the return. For those taxpayers whose HRA component is high, the old regime is more beneficial.”
Benefits of deduction in FY25 returns
Taxpayers can avail the benefits of many deductions and exemptions while filing FY25 returns. Especially if a taxpayer has made tax saving investments during FY25, then he can claim deduction. Under Section 80C, deduction of up to Rs 1.5 lakh can be claimed from tax saving investments in a financial year. Apart from this, deduction can also be claimed on health insurance under Section 80D and home loan interest under Section 24B. Taxpayers living in rented houses can claim HRA. Also, by claiming standard deduction of Rs 50,000, the total deduction can exceed Rs 3-4 lakh.
Old regime is more beneficial for some taxpayers
According to Neeraj Aggarwal, partner, Nangia & Co LLP, the old income tax regime is more beneficial for taxpayers with certain income levels. He said, “Taxpayers can claim deduction of Rs 1.5 lakh under section 80C, deduction up to Rs 75,000 under section 80D, deduction under HRA, deduction on home loan interest and deduction on education loan in the old regime.”
Before filing returns, see which regime is more beneficial
He said that if the annual income of a taxpayer is Rs 15 lakh, then he will benefit from the old regime only if he claims a deduction of about Rs 4 lakh. If the annual income of a taxpayer is Rs 20 lakh, then the old regime will be beneficial only if he claims a deduction of up to Rs 4.5 lakh. This means that now select the default tax regime i.e. the new regime of income tax only after tax calculation. Taxpayers will get the benefit of the new regime when filing returns next year.
