Union Budget: Finance Minister Nirmala Sitharaman has tweaked the tax slabs to bring some tax relief for the taxpayers. The Budget 2024 has made significant changes to the tax slabs in the New Regime, offering taxpayers an additional chance to reduce their tax liability by up to Rs. 17,500.
Moreover, the standard deduction limit has been elevated to Rs. 75,000, and the family pension deduction has been enhanced to Rs. 25,000 from the previous Rs. 15,000. These modifications are effective for the Financial Year 2024-25.
Currently, there are two tax regimes available to taxpayers. The first is the old tax regime, charactersed by a wide range of deductions and exemptions. The second is the new tax regime, distinguished by a lower tax rate but limited deductions and exemptions, with the exception of the standard deduction.
In this Budget, FM Sitharaman kept the Old Tax regime untouched.
She brought in some major changes in the New Tax Regime noting that the key feature of the new regime is its reduced tax rate in comparison to the old regime, which still maintains its selection of deductions and exemptions.
New income tax slab announced
Up to 3,00,000: Nil From 3,00,001 to 7,00,000: 5% From 7,00,001 to 10,00,000: 10% From 10,00,001 to 12,00,000: 15% From 12,00,001 to 15,00,000: 20% Above 15,00,000: 30%
The tax slabs for Old Tax Regime will remain the same. Here are the tax slabs:
INCOME TAX SLAB (IN RS) OLD TAX REGIME 0-2,50,000 0% 2,50,001-3,00,000 5% 3,00,001-5,00,000 5% 500,001-6,00,000 20% 6,00,001-9,00,000 20% 9,00,001-10,00,000 20% 10,00,001-12,00,000 30% 12,00,000-15,00,000 30% 15,00,0001 & Above 30%
|
Tax Slabs for FY 2023-24 |
Tax Rate |
Tax Slab for FY 2024-25 |
Tax Rate |
|
Upto Rs 3 lakh |
Nil |
Upto Rs 3 lakh |
Nil |
|
Rs 3 lakh - Rs 6 lakh |
5% |
Rs 3 lakh - Rs 7 lakh |
5% |
|
Rs 6 lakh - Rs 9 lakh |
10% |
Rs 7 lakh - Rs 10 lakh |
10% |
|
Rs 9 lakh - Rs 12 lakh |
15% |
Rs 10 lakh - Rs 12 lakh |
15% |
|
Rs 12 lakh - Rs 15 lakh |
20% |
Rs 12 lakh - Rs 15 lakh |
20% |
|
More than 15 lakh |
30% |
More than 15 lakh |
30% |
Source: ClearTax
Dipesh Jain, Partner, Economic Laws Practice, said: "While the base exemption limit of INR 3 lakhs has remained unchanged, which was expected to be increased marginally, the 5% tax slab is proposed to be expanded by INR 1L ie INR 3 lakh - 7 lakh from the existing slab of INR 3 lakh - 6 lakh. The highest tax slab of 30% continues to be status quo ie more than INR 15 lakh. Accordingly, there would be a marginal relief of INR 17,500 for individual tax-payers opting for new regime. This would further enhance the attractiveness of the new tax regime as compared to the old tax regime, where there are no relaxations proposed."