Latest Official Tax (Income Tax + TDS) Updates by CBDT India

The direct taxation system in India has one of the most complex structures in the entire world. The Central Board of Direct Taxes (CBDT), the regulatory authority governing the administration of income tax in the country, adds to this complexity by regularly making changes to the various rules and provisions of the Income Tax Act of 1961. This makes keeping track of the various tax updates a challenging affair. 

Fortunately, this guide containing all the latest income tax updates can help you navigate through the intricacies of our country’s direct taxation system. Continue reading to find out all about the significant changes made to income tax and Tax Deducted at Source (TDS) provisions and their implications. 

1. New Tax Regime to be the Default Option 

One of the major tax updates for the upcoming assessment year 2024-2025 (financial year 2023-2024) is that the new tax regime shall now be set as the default option for all taxpayers. The primary objective behind this move is to encourage taxpayers to opt for the new regime as against the old regime. However, taxpayers who wish to continue with the old tax regime can still do so by opting for it at the time of filing their income tax returns. 

2. JSON Schema Released for ITR-1 and ITR-4

The JSON schema for ITR-1 and ITR-4 have been released for the assessment year 2024-2025 on 18th March 2024. Using the JSON schema, taxpayers can begin preparing their income tax returns for the financial year through the offline mode. This can be very helpful for those wanting to get a head start on their tax return filing process. 

3. ITR-2, ITR-3, ITR-5, ITR-6 and ITR-7 Released for A.Y. 2024-2025

As per the latest income tax notification dated 5th February 2024, the CBDT has updated ITR-2, ITR-3 and ITR-5 for the assessment year 2024-2025. The updated forms will go into effect on April 1 2024. 

The CBDT also released the updated ITR-7 form for the assessment year 2024-2025 via another latest income tax notification dated 4th March 2024. The form is already available on the e-filing portal of the Income Tax Department. 

4. Increase in the Basic Exemption Limit and Rebate

For the assessment year 2024-2025, the basic exemption limit under the new tax regime has been hiked to Rs. 3 lakh from the erstwhile Rs. 2.5 lakh. This essentially means that taxpayers opting for the new tax regime need not pay any tax nor file income tax returns if their total taxable income during FY 2023-2024 is below Rs. 3 lakh. 

Additionally, the rebate under Section 87A of the Income Tax Act of 1961 has also been hiked for the assessment year 2024-2025. Now, taxpayers with a total taxable income of up to Rs. 7 lakh will be eligible for the full rebate, meaning that they will not have to pay any tax on their income. 

5. Updated Tax Slabs for the New Income Tax Regime 

One of the major tax updates for the assessment year 2024-2025 is the change in the tax slabs under the new income tax regime. The table below outlines the updated tax slabs along with the income tax rates applicable for each slab. 

6. Standard Deduction for New Tax Regime

Another latest income tax update is the applicability of standard deduction to the new tax regime for the assessment year 2024-2025. Previously, individuals with income under the head ‘Salaries’ could only avail of the standard deduction of Rs. 50,000 if they opted for the old tax regime. However, with this update, taxpayers with income under ‘salaries’ opting for the new regime will be able to benefit from the standard deduction.   

7. Taxation of Life Insurance Maturity Proceeds 

The maturity proceeds from life insurance policies issued after 1st April 2023 will now be taxable if the total annual premium exceeds Rs. 5 lakh. This new tax update has come into force from the financial year 2023-2024 and onwards. 

8. Higher TDS and TCS Rates for Deductees with Inoperative PAN Status 

All individuals who don’t link their PAN with Aadhaar will have their PAN status marked as inoperative. According to the latest tax deduction news, all deductees and collectees with their PAN marked as inoperative shall be subject to higher TDS and TCS rates until the status is marked as operative or active once again. Additionally, individuals with inoperative PAN shall not be eligible for any TDS or TCS refunds or interest on such refunds. 

9. Increase in Leave Encashment Tax Exemption Limit

For non-government employees, the leave encashment tax exemption limit was kept at just Rs. 3 lakhs for a long time. However, with the latest income tax notification, the limit has been hiked to Rs. 25 lakh to better reflect the current times. 

10. No Refunds for Taxpayers with Non-Validated Bank Accounts

Taxpayers who have not validated their bank accounts on their income tax e-filing portal will not be eligible to receive any refunds whatsoever. In the case of non-validated bank accounts, taxpayers can validate them by logging into the income tax e-filing portal to receive refunds. 

Conclusion

As a taxpayer, it is crucial to stay on top of all the latest official tax updates by the Central Board of Direct Taxes. Failing to keep yourself updated could potentially result in errors, mistakes and omissions, which can in turn lead to severe consequences. 

The legal repercussions for not adhering to the rules and regulations laid out under the Income Tax Act of 1961, even if the non-compliance is inadvertent, could range from penalties and fines to even imprisonment. 

Fortunately, you can avoid all of this by simply keeping track of the tax deduction news and other income tax updates. If you are unsure of a particular provision or tax-related issue, consider seeking the assistance of an experienced tax professional to get it clarified.