Income Tax rules for FY25: 6 tips for salaried tax payers

The new financial year (FY25) is set to begin on April 1, and it's the time when proposed income tax rules by the government come into effect (unless stated otherwise).

For this fiscal year, the government hasn't made any changes to the income tax laws. Hence, the rules from the previous year remain in place.

However, glancing at the income tax rules again can help you plan your finances better for the new financial year.

Choose your tax regime - You need to choose between the old and new tax regimes for TDS (tax deducted at source) on your salary.

The new tax regime is the default option. If you don't tell your employer which regime you prefer, they'll deduct tax based on the new regime. Make sure to inform them beforehand.

Basic exemption limits - The basic exemption limit varies between the old and new tax regimes. Under the new regime, income up to Rs 3 lakh is exempt from tax for everyone.

In the old regime, it depends on your age. For those under 60, it's Rs 2.5 lakh, for seniors aged 60-80, it's Rs 3 lakh, and for super seniors aged 80 and above, it's Rs 5 lakh.

Zero tax payable -Both regimes offer tax rebates under Section 87A, making zero tax payable if your net taxable income doesn't exceed a certain limit.

The new regime offers a higher rebate, up to Rs 25,000 for incomes up to Rs 7 lakh, while the old regime offers up to Rs 12,500 for incomes up to Rs 5 lakh.

Deductions and exemptions - The old regime provides more deductions and exemptions compared to the new one.

Examples include deductions under Section 80C for investments, Section 80D for health insurance, and deduction on home loan interest. The new regime offers fewer deductions, including a standard deduction of Rs 50,000 and Section 80CCD (2) for NPS contributions.

File ITR on time - If you want to opt for the old tax regime, make sure to file your Income Tax Return (ITR) before the July 31 deadline. Opting for the old regime is only possible if you file your ITR on time. Late filing means you'll be taxed based on the new regime.

Reduced surcharge - High-income earners under the new tax regime will pay a lower surcharge rate, reduced from 37% to 25% for incomes over Rs 5 crore. Opting for the old regime means a surcharge rate of 37%.

The income tax slabs under the new tax regime are as follows:

Income from Rs 0 to Rs 3,00,000: 0% tax rate

Income from Rs 3,00,001 to Rs 6,00,000: 5%

Income from Rs 6,00,001 to Rs 9,00,000: 10%

Income from Rs 9,00,001 to Rs 12,00,000: 15%

Income from Rs 12,00,001 to Rs 15,00,001: 20%

Income above Rs 15,00,000: 30%