Understanding Section 115BAC: New Tax Regime Slab Rates
The Indian tax system, under Section 115BAC, has introduced new slab rates aimed at simplifying tax calculations. Here's a breakdown of the rates:
- Income up to Rs. 3,00,000: No tax
- Income from Rs. 3,00,001 to Rs. 7,00,000: 5%
- Income from Rs. 7,00,001 to Rs. 10,00,000: 10%
- Income from Rs. 10,00,001 to Rs. 12,00,000: 15%
- Income from Rs. 12,00,001 to Rs. 15,00,000: 20%
- Income above Rs. 15,00,000: 30%
This progressive structure aims to provide relief and streamline the taxation process for various income groups.
Enhanced Standard Deduction for Salaried Individuals
Salaried individuals now benefit from an increased standard deduction of Rs. 75,000 under the new tax regime. This deduction helps in reducing the taxable income, thereby offering more savings for taxpayers.
Changes in TDS Rates
Significant changes have been made to the TDS (Tax Deducted at Source) rates, effective from 1st October 2024:
- Section 194DA: Life insurance policy payments see a reduction from 5% to 2%.
- Section 194G: Commission on lottery tickets is now 2%, down from 5%.
- Section 194H: Commission or brokerage has also been reduced to 2%.
- Section 194IB: Rent payments by individuals or HUFs have a reduced TDS of 2%.
- Section 194M: Certain payments by individuals or HUFs now attract a 2% TDS.
- Section 194O: E-commerce operator payments to participants now attract just 0.1% TDS, down from 1%.
These reductions aim to ease the cash flow for taxpayers and ensure better compliance.
Section 111A: Tax on Short-term Capital Gains
For short-term capital gains, the tax rate has been updated:
- Up to 23rd July 2024: 15%
- From 23rd July 2024 onwards: 20%
This adjustment reflects the government's effort to increase tax revenue from short-term investments.
Section 112: Tax on Long-term Capital Gains
Changes to long-term capital gains tax rates include:
- Up to 23rd July 2024: 20%
- From 23rd July 2024 onwards: 12.5%
The reduced rate for long-term gains encourages long-term investments, aligning with the goal of fostering economic stability.
Section 112A: Long-term Capital Gains on Stocks
For stock market investors:
- Exemption Amount: Rs. 1,25,000
- LTCG up to 23rd July 2024: 10%
- LTCG from 23rd July 2024 onwards: 12.5%
This change aims to balance the taxation on long-term gains while providing a fair exemption limit.
Maximum Remuneration for Partners Under Section 40(b)
The allowable remuneration for partners in a firm is structured as follows:
- On the first Rs. 6,00,000 of book-profit or in case of a loss: Rs. 3,00,000 or 90% of the book-profit, whichever is higher.
- On the balance of the book-profit: 60%
This structure ensures fair compensation while maintaining tax compliance.
Introduction of Section 194T from April 2025
Starting 1st April 2025, a new TDS rate of 10% will apply if any sum in the nature of salary, remuneration, commission, bonus, or interest paid to a partner exceeds Rs. 20,000. This addition ensures a fair tax contribution from partnership incomes.
