A separate exemption of Rs 75,000 will be given to employed people. People who earn money in any way, be it a job, business or profession, know very well that every year the month of April brings many changes for them. However, this time the month of April is going to be something special, because the big changes that are going to happen this time from April, they may never have happened before.

This is also very special for those who earn money because the matter is directly related to people’s money. The government has made many big announcements for the middle class and employed people, which will come into effect from 1 April 2025.

Finance Minister Nirmala Sitharaman had announced in the budget presented on February 1 that along with the change in the income tax slab, tax exemptions would also be given. The Finance Minister had not made any changes in the old tax system, but in the new system, along with changing the tax slabs, she had also increased the scope of tax exemptions. These new income tax rates will be applicable from the new financial year starting from April 1. Therefore, it is important for every person who earns money to know what kind of tax exemption he will get and how much money he will save.

What is the new income tax slab (new provision)?

• Zero tax on income up to Rs 4 lakh
• 5% tax on income between Rs 4 lakh and Rs 8 lakh
• 10% tax on income between Rs 8 lakh and Rs 12 lakh
• 15% tax on earnings from 12 to 16
• 20% tax on income between Rs 16 lakh and Rs 20 lakh
• 25% tax on income between Rs 20 lakh and Rs 24 lakh
• 30% tax will be levied on income above Rs 24 lakh

Bumper tax exemption

The government has not only given relief to employers and the middle class by reducing the tax slab, but has also significantly expanded the scope of tax exemption. From the new financial year starting from April 1, no tax will be payable on annual income up to Rs 12 lakh. Under the new income tax regime, the government has completely exempted income up to Rs 12 lakh from the tax net. This means that even a person earning Rs 1 lakh per month will not have to pay any tax, whether he has made any investment or not.

75 thousand more exemption for employed people

The relief given by the government in income tax does not end here, but more relief will be given to employed people. The Finance Minister has said that an additional tax exemption of Rs 75 thousand will be given to employed people in the form of standard deduction. This means that the direct tax exemption for employed people will be Rs 12.75 lakh. This tax exemption will be available without any investment.

TDS will also be exempted.

The scope of tax deduction at source on investments like FD has also been doubled. This exemption is for senior citizens, which was Rs 50,000 till now. Now it has been increased to Rs 1 lakh. This means that if senior citizens get interest of up to Rs 1 lakh annually on FD, then this amount will be completely out of the scope of tax. Not only this, the scope of tax exemption on income from house rent has also been increased. Now no tax will be levied on taking annual rent of Rs 6 lakh.

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The benefit will be that these employees will have to spend less on rent on the house, due to which they can save more money in their salary. Can save, this will increase their salary. If you work for a company and live in rent-free houses provided by the company, then there is a big news for such people. Actually, such people have got big relief from the Income Tax Department.

The department has changed the rules for evaluating rent-free accommodation. The Income Tax Department has reduced the tax for employees living in company accommodation. Central and state government employees will benefit from this, because they are provided accommodation. The new rule has come into effect from today, September 1, 2023.

Income tax rules on rent-free house provided by company

In cities with population more than 40 lakh as per 2011 census, the salary is 10 per cent, while in cities with population more than 15 lakh but not more than 40 lakh as per 2011 census, it is 7.5 per cent of the salary . The value of rent-free provided by an employer to an employee is taxable as perquisite.

What effect will this new rule have on employees?

The question arises that what will be the impact on the employees due to reduction in the taxable value of rent-free accommodation by the Income Tax Department, then it will benefit them that these employees will have to spend less rent on the house, due to which they can save more money in their salary. Can, this will increase their salary.

As such, employees who live in employer-owned/rented accommodation may see a decline in the rent-free , taxable perquisite value, thereby reducing the tax burden. Archit Gupta, founder and CEO of Clear, said that will be able to bring a little more money into their hands.

These taxpayers will benefit from this rule change

According to the CBDT notification, the changes are expected to particularly benefit high-income individuals who receive employer-provided housing allowances.

Will you benefit?

The tax and investment expert said the employer would have to look at the calculation of the perquisite in relation to the value of the rent-free. He further said that its direct impact will be visible on the salaries of the employees. ‘ With lower taxes, the salary in hand will be higher.

The Central Board of Direct Taxes (CBDT) has notified amendments to the income tax rules for assessment of perks of rent-free or concessional accommodation to employees by employers. The Finance Act 2023 had brought an amendment for the purposes of computing ‘ perquisite ‘ in respect of the value of rent-free or concessional accommodation provided to an employee by his employer.

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