Transformations in India’s Personal Income Tax Structure for 2024 The fiscal landscape of India is witnessing pivotal shifts in 2024, particularly affecting personal income tax protocols. The Union Budget for the financial year 2024-25 has introduced various reforms that will substantially impact the deductions and exemptions available to taxpayers when they prepare their income tax returns (ITR) in July 2025.
Overview of 2024 Income Tax Reforms Below, we delve into a detailed overview of the significant changes made to the income tax framework.
1) Revised Tax Slabs under the New Regime The refreshed tax structure features a new regime that offers taxpayers potential annual savings of around ₹17,500. The redefined tax slabs are:
| Income Slab | Tax Rate |
| Up to ₹3 lakh | Nil |
| ₹3 – 7 lakh | 5% |
| ₹7 – 10 lakh | 10% |
| ₹10 – 12 lakh | 15% |
| ₹12 – 15 lakh | 20% |
| Above ₹15 lakh | 30% |
2) Increase in Standard Deduction In a favorable amendment, the government has raised the standard deduction limit from ₹50,000 to ₹75,000.
Additionally, the standard deduction for family pensioners has seen an increase from ₹15,000 to ₹25,000 within the new tax regime.
3) Standard Deduction Limit for the Old Regime Taxpayers choosing the old tax regime will notice that the standard deduction limit remains unchanged. The slabs for this regime are as follows:
| Income Slab | Tax Rate |
| Up to ₹2.5 lakh | Nil |
| ₹2.5 – 5 lakh | 5% |
| ₹5 – 10 lakh | 20% |
| Above ₹10 lakh | 30% |
4) Changes to Capital Gains Tax Changes have been made to the capital gains tax structure. Short-term capital gains tax has increased from 15% to 20%. Furthermore, the tax on long-term capital gains has risen from 10% to 12.5% for listed shares and equity mutual funds. Additionally, the exemption threshold for long-term capital gains has been revised upward from ₹1 lakh to ₹1.25 lakh.
5) Increased Securities Transaction Tax (STT) Investors trading in equity derivatives will encounter higher securities transaction tax rates. For options, the STT will rise from 0.0625% to 0.1% of the premium—aligning with delivery transactions—while the tax for futures will increase from 0.0125% to 0.02% of the traded price.
6) Taxation Changes on Share Buybacks In a notable shift, individual shareholders will now be subject to taxation on buyback proceeds similar to dividends, under their respective income tax slabs. Previously, shareholders enjoyed an exemption on these proceeds. This regulation became effective on October 1, 2024.
7) Alterations to Indexation Benefits Moving forward, indexation for all long-term capital gains is no longer available. However, Indian residents or Hindu Undivided Families (HUF) can opt for a tax rate of 12.5% without indexation or a higher rate of 20% with indexation benefits for transactions involving land and property—a revision that raises concerns for long-term investors in real estate.
8) Modifications to TDS Rates Several adjustments to Tax Deducted at Source (TDS) have also been introduced. The former 5% TDS on various payments will now collapse into a single 2% rate, while the previously existing 20% TDS on mutual fund or UTI unit repurchases will be eliminated. Moreover, the TDS for e-commerce operators will decrease from 1% to 0.1%. Notably, tax collected at source (TCS) will now be creditable against TDS deducted from salaries, while non-compliance with TDS payment timelines will no longer face criminal penalties.
9) New Threshold for Reopening Assessments The criteria for reassessing previously filed returns have been refined. Authorities may now reopen assessments up to five years after the closing of the assessment year, contingent on escaped income exceeding ₹50 lakh.
10) Introduction of the Vivad se Vishwas Scheme During the Union Budget address, Finance Minister Nirmala Sitharaman unveiled the Vivad se Vishwas Scheme, aimed at resolving tax disputes and easing backlog burdens. This initiative allows taxpayers to settle disputed taxes by paying the principal amount alongside a specified percentage, thereby waiving additional penalties and interest. These changes in India’s personal income tax policies are poised to reshape the financial landscape for taxpayers, providing both opportunities for savings and avenues for compliance.
