Finance Minister Nirmala Sitharaman mentioned during her Budget 2024 speech that latest changes will help taxpayers save up to Rs 17,500.
During her presentation of Budget 2024 on July 23, Finance Minister Nirmala Sitharaman has introduced changes in the new tax regime. While the new tax regime has been introduced with fresh changes, the old tax regime has been retained. And as per the changes in the new tax regime, FM Sitharaman mentioned taxpayers would be able to save up to Rs 17,500 as compared to the existing rates.
Not just that, with an aim to provide surplus at the hands of the middle class, she also highlighted an increase in the standard deduction to Rs 75,000 from an earlier Rs 50,000. She has also introduced changes in the tax slabs under the simplified New Tax Regime (NTR) marginally, and these new changes will give a benefit of up to Rs 17,500 per year to individual taxpayers under the NTR.
It is believed that the taxpayers falling in the highest tax bracket, who have income of Rs 15 lakh or more, will now have to pay tax of Rs 7,500 considering the enhancement in the standard deduction limit under the NTR. The same segment of taxpayers will also get a total savings of Rs 10,000 due to rationalisation, which means that their total savings will be Rs 17,500.
For those with a taxable income of over Rs 12 lakh, they will save Rs 10,000 on account of rate rationalisation. However, their savings owing to the increase in standard deduction would be lower, as compared to those who earn above Rs 15 lakh. This is due to the calculations based on their applicable tax slabs, which are different for different income groups.
With the Budget 2024, the income exemption up to Rs 3 lakh has been maintained. However, the second tax slab is now Rs 3 lakh to Rs 7 lakh than the previous Rs 3 lakh to Rs 6 lakh. The third tax slab is now Rs 7 lakh to Rs 10 lakh, as compared to the previous Rs 7 lakh to Rs 9 lakh. Coming to the fourth tax slab, it is now limited to Rs 10 lakh to Rs 12 lakh, and has been changed from the previous Rs 9 lakh to Rs 12 lakh. The remaining slabs remain untouched.
With the expansion in the 5% tax slab, taxpayers will have a saving of Rs 5,000 (Rs 1,00,000 * 5%). Owing to the expansion of the 10% slab, there is an added saving of Rs 5,000 (Rs 1,00,000 * 5%, since 5% is the differential between 15% and 10%). Additionally, due to the Rs 7,500 savings at 30% owing to the standard deduction increase by Rs 25,000, the total calculation comes out to Rs 17,500.
The Finance Minister Sitharaman had said during Budget 2024 speech, "As a result of these changes, a salaried employee in the new tax regime stands to save up to Rs 17,500 in income tax.”
The deduction on family pensions for pensioners too has been amped up from Rs 15,000 to Rs 25,000, which will give benefits to approximately four crore salaried individuals and pensioners.
Meanwhile, the Old Tax Regime (OTR) has been unchanged in the Union Budget for 2024-25, and with fresh changes in the new regime, the government wishes to attract more salaried taxpayers to it.
