The finance ministry has issued a clarification regarding the applicability of both new and old tax regimes.
According to the ministry, the new regime, introduced through the Finance Act 2023, applies to individuals other than companies and firms as the default regime from the financial year 2023-24, and the assessment year corresponding to this is AY 2024-25.
In the new tax regime, the tax rates are significantly lower. However, various exemptions and deductions (other than standard deduction of Rs. 50,000 from salary and Rs. 15,000 from family pension) are not available, unlike in the old regime.
Though the new tax regime is the default option, taxpayers can choose the tax regime that they think is beneficial to them, the ministry said.
The option for opting out from the new tax regime is available till the filing of return. Furthermore, eligible persons without any business income will have the option to choose the regime for each financial year. The finance ministry also clarified that there are no new changes coming into effect from Monday, 01 April 2024.