Tax SavingManage BusinessTaxation

Income Tax Exemption List for FY 2024-25: Save Maximum Tax

The start of a new financial year brings with it changes to the income tax rules and regulations in India. As a taxpayer, it’s crucial to stay informed about the latest exemptions, deductions, and rebates available to you. This comprehensive guide will walk you through the income tax exemption list for the fiscal year 2024-25, helping you make informed decisions and save on your taxes.

Also Read-How to File Income Tax Returns (ITR) Online in India?

Understanding the New Tax Regime.

In the Union Budget 2023, the government introduced significant changes to the income tax slabs, making the new tax regime the default option for taxpayers. The new regime offers lower tax rates but with fewer exemptions and deductions compared to the old tax regime. However, taxpayers still have the option to choose between the new and old tax regimes based on their financial situation and tax-saving investments.

New Tax Regime Slabs for FY 2024-25.

Total IncomeTax Rate
Up to ₹3,00,000Nil
₹3,00,001 to ₹6,00,0005%
₹6,00,001 to ₹9,00,00010%
₹9,00,001 to ₹12,00,00015%
₹12,00,001 to ₹15,00,00020%
Above ₹15,00,00030%

Under the new tax regime, taxpayers with an income of up to ₹7 lakh can claim a rebate under Section 87A, effectively reducing their tax liability to zero.

Standard Deduction and Exemptions.

Standard Deduction.

Salaried individuals can claim a standard deduction of ₹50,000 under both the old and new tax regimes for FY 2024-25. This deduction helps reduce your taxable income without the need for submitting proof of investments or expenses.

House Rent Allowance (HRA) Exemption.

Under the old tax regime, salaried individuals can claim an exemption on their House Rent Allowance (HRA) as per Section 10(13A). However, this exemption is not available under the new tax regime.

Leave Travel Allowance (LTA) Exemption.

The Leave Travel Allowance (LTA) exemption, which allows salaried employees to claim tax benefits on travel expenses incurred during vacation, is available only under the old tax regime.

Deductions under Chapter VI-A.

Chapter VI-A of the Income Tax Act provides various deductions that help reduce your taxable income. However, most of these deductions are not available under the new tax regime, except for Section 80CCD(2) and Section 80JJAA.

Section 80C.

Under the old tax regime, taxpayers can claim deductions up to ₹1.5 lakh for investments and expenses such as:

  • Employee Provident Fund (EPF)
  • Public Provident Fund (PPF)
  • Equity-Linked Savings Scheme (ELSS)
  • National Savings Certificate (NSC)
  • Life insurance premiums
  • Tuition fees for children’s education

Section 80CCD.

Section 80CCD allows deductions for contributions made to the National Pension System (NPS). While the deduction under Section 80CCD(1) is limited to ₹1.5 lakh and falls under the overall Section 80C limit, taxpayers can claim an additional deduction of up to ₹50,000 under Section 80CCD(1B).

Contributions made by employers to the NPS are also eligible for deduction under Section 80CCD(2) without any upper limit. This deduction is available under both the old and new tax regimes.

Section 80D.

Under the old tax regime, taxpayers can claim deductions for medical insurance premiums paid for self, spouse, children, and parents. The deduction limit is ₹25,000 for self, spouse, and children, and an additional ₹25,000 for parents. If the parents are senior citizens, the limit increases to ₹50,000.

Section 80DD.

Section 80DD provides a deduction of ₹75,000 for expenses incurred on the medical treatment and maintenance of a dependent with a disability. The deduction increases to ₹1,25,000 in case of severe disability.

Section 80E.

Taxpayers can claim a deduction for the interest paid on an education loan under Section 80E. There is no upper limit on the deduction amount, and it can be claimed for a maximum of 8 years.

Section 80G.

Donations made to eligible charitable institutions can be claimed as a deduction under Section 80G. The deduction amount varies between 50% and 100% of the donated amount, depending on the nature of the charitable organization.

Section 80TTA and 80TTB.

Under Section 80TTA, taxpayers can claim a deduction of up to ₹10,000 on the interest earned from savings accounts. For senior citizens, Section 80TTB provides a deduction of up to ₹50,000 on interest income from deposits with banks, post offices, and co-operative societies.

Other Exemptions and Benefits.

Leave Encashment Exemption.

The exemption limit for leave encashment has been increased from ₹3 lakh to ₹25 lakh for non-government employees under the new tax regime.

Presumptive Taxation Scheme.

The presumptive taxation scheme, which allows eligible businesses and professionals to declare income at a prescribed rate, has been extended to taxpayers with a turnover of up to ₹3 crore for small businesses (Section 44AD) and ₹75 lakh for specified professionals (Section 44ADA).

Choosing Between the Old and New Tax Regimes.

Taxpayers must carefully evaluate their financial situation and investment preferences before opting for either the old or new tax regime. The old tax regime may be more beneficial for those who have made significant investments in tax-saving instruments and can claim a higher amount of deductions. On the other hand, the new tax regime may be advantageous for taxpayers with lower incomes or those who do not have many tax-saving investments.

Conclusion

The income tax exemption list fo.r FY 2024-25 offers a range of options for taxpayers to reduce their tax liability. By understanding the available deductions, exemptions, and rebates under both the old and new tax regimes, you can make informed decisions and optimize your tax savings. Remember to consult with a tax expert or use reliable tax calculation tools to determine the most suitable tax regime for your unique financial situation.

Frequently Asked Questions.

  1. Can I switch between the old and new tax regimes every year?
    Yes, taxpayers have the option to choose between the old and new tax regimes every financial year based on their income and investment plans.
  2. Is the standard deduction available under both tax regimes?
    Yes, the standard deduction of ₹50,000 is available for salaried individuals under both the old and new tax regimes for FY 2024-25.
  3. Can I claim HRA exemption under the new tax regime?
    No, the HRA exemption is not available under the new tax regime.
  4. Is there a limit on the deduction for education loan interest under Section 80E?
    There is no upper limit on the deduction amount for education loan interest under Section 80E. However, the deduction can be claimed for a maximum of 8 years.
  5. What is the rebate available under the new tax regime for FY 2024-25?
    Under the new tax regime, taxpayers with an income of up to ₹7 lakh can claim a rebate under Section 87A, effectively reducing their tax liability to zero.

By staying informed about the latest income tax exemptions, deductions, and rebates, you can make the most of your hard-earned money and plan your finances effectively. Remember to consult with a tax expert or use reliable resources to ensure compliance with the income tax laws and regulations in India.

Disclaimer

This article is for informational purposes only and does not constitute financial or tax advice. Please consult with a qualified tax professional for personalized advice and to ensure compliance with the latest tax laws and regulations.


Discover more from TaxGst.in

Subscribe to get the latest posts sent to your email.

Avatar of C.K. Gupta

Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.

Related Articles

Back to top button

Discover more from TaxGst.in

Subscribe now to keep reading and get access to the full archive.

Continue reading

Adblock Detected

Adblocker Detected Please Disable Adblocker to View This PAGE