5 Major Income Tax Rule Changes in the Last 6 Months Every Taxpayer Should Know

Income tax rules are constantly evolving to meet the needs of a changing economy. In the last six months, several key changes have been implemented that could impact how individuals and businesses file their returns and manage their tax obligations. Whether you're a salaried employee, a freelancer, or a business owner, it’s important to stay up-to-date with these changes to avoid penalties or missed opportunities. Here’s a roundup of the five most significant income tax rule changes from the past six months:

1. Revised Income Tax Slabs under the New Regime

In an effort to simplify taxation and boost disposable income, the government has revised the income tax slabs under the new tax regime. The new structure offers taxpayers lower rates, with no deductions or exemptions allowed. Under this regime, income up to ₹3 lakh is tax-free, and the rates progressively increase as income rises.

Taxpayers now have more flexibility in terms of tax planning but must carefully evaluate whether the new regime benefits them over the older one, especially if they qualify for deductions like HRA or 80C.

Key Change:

New tax slabs under the new regime:

• Up to ₹3 lakh: Nil

• ₹3 lakh to ₹6 lakh: 5%

• ₹6 lakh to ₹9 lakh: 10%

• ₹9 lakh to ₹12 lakh: 15%

• ₹12 lakh to ₹15 lakh: 20%

• Above ₹15 lakh: 30%

2. Increased TDS Thresholds for Senior Citizens

The government has raised the threshold for Tax Deducted at Source (TDS) for senior citizens aged 60 and above. Under the new rules, TDS on interest income from banks, post offices, or other financial institutions will only be deducted if the annual interest income exceeds ₹50,000 (up from ₹40,000 previously). This change ensures that senior citizens with lower interest income are not unnecessarily burdened by TDS.

Key Change:

Senior citizens will face TDS on interest income only if the total exceeds ₹50,000 in a financial year, providing relief to those with modest earnings.

3. Facilitating e-PAN for Ease of Tax Filing

The government has made the process of obtaining a Permanent Account Number (PAN) even easier by allowing the use of Aadhaar as a valid form of identification for applying for an e-PAN. Taxpayers can now apply for an e-PAN online, and the entire process is paperless. This shift is expected to reduce the hassle of applying for PAN and also minimize the chances of errors or fraud.

Key Change:

The introduction of e-PAN has streamlined the process of acquiring a PAN for taxpayers, particularly those who previously had difficulty navigating traditional paperwork.

4. Taxation of Virtual Digital Assets (VDAs)

One of the most significant tax changes in recent months concerns the taxation of cryptocurrencies and other virtual digital assets (VDAs). The Finance Act 2023 imposed a tax of 30% on income from the transfer of cryptocurrencies and NFTs (Non-Fungible Tokens). This includes not just profits from trading but also from gifts or transfers. In addition, a 1% TDS (Tax Deducted at Source) is applicable on the transfer of VDAs, making it crucial for investors in digital currencies to maintain records of all transactions.

Key Change:

Virtual digital assets are now taxed at 30%, with a 1% TDS on all transfers, making it critical for crypto investors to track their transactions for tax purposes.

5. Changes in GST on Online Gaming and Gambling

Online gaming and gambling have become increasingly popular, leading to a shift in tax policies to better capture these growing industries. The government has expanded the scope of the Goods and Services Tax (GST) to include online gaming and gambling at a higher rate. A uniform 28% GST will now apply to the full value of the bet placed, whether the bet is won or lost, making it one of the highest tax rates applicable in the country.

Key Change:

A 28% GST is now levied on online gaming and gambling, directly impacting both operators and users.

Conclusion

These five changes to income tax rules in the last six months are crucial for every taxpayer to know. Whether it’s the revision of income tax slabs under the new regime, changes in TDS thresholds for senior citizens, or the tightening of rules around virtual assets and online gaming, staying informed will ensure that taxpayers can take full advantage of new provisions and avoid any compliance issues. As always, it’s a good idea to consult with a tax professional to understand how these changes specifically impact your personal tax situation.