Budget 2024: Union Finance Minister Nirmala Sitharaman made two changes to the new tax regime

The new budget looks attractive for the salaried and encourages them to shift to the new tax regime to save up to Rs. 17,500 in income tax.

On Tuesday, July 23, Union Finance Minister Nirmala Sitharaman presented the Union Budget 2024. As per the new budget, the center estimates that about four crore salaried individuals and pensioners will benefit if they choose to file their income tax returns under the new regime. She said salaried income taxpayers who shift to the new tax regime can save up to Rs. 17,500 in income tax.

Two changes made to the new tax regime.

Two changes were made to make it more attractive for the salaried and encourage them to migrate from the old regime. The finance minister announced increased standard deduction for those opting to file their income tax returns under the new regime and also widened the tax slabs to give relief. Similar relief has been announced by the government on family pension, where pensioners opting for the new regime will be allowed an enhanced deduction of Rs. 25,000 against Rs. 15,000 allowed until the financial year 2023-2024. The government estimates that around four crore salaried individuals and pensioners will benefit if they file their income tax returns under the new tax regime.

How will it benefit salaried taxpayers?

With effect from this financial year, or assessment year 2025-26, salaried taxpayers choosing the new tax regime will be allowed to claim a standard deduction of Rs. 75,000 against Rs. 50,000 allowed until this year. This will help them lower their tax burden. The standard deduction is allowed to the salaried class of taxpayers to offset several expenses they may incur, like transport.

Tax slab changes in the new budget.

The finance minister widened the tax slabs under the new tax regime for incomes below Rs. 10 lakh. Changes have been announced in the 5%, 10%, and 15% tax slabs. Taxable income up to Rs. 3 lakh will continue to be exempt from income tax, as is the case under the new regime. The 5% slab has been widened from Rs. 3 lakh-6 lakh to Rs. 3 lakh-7 lakh, translating into a saving of Rs. 5,000 in income tax for anyone with taxable income of more than Rs. 6 lakh. The 10% slab has been widened from Rs. 6 lakh-9 Lakh to Rs. 7 lakh-10 lakh. All those with taxable income of over Rs. 9 lakh will benefit from this change, leading them to save another Rs. 5000.

The 15% slab is widened from Rs. 9 lakh-12 lakh to Rs. 10 lakh-12 lakh. The 20% and 30% slabs are unchanged, with taxable income between Rs. 12 lakh and Rs. 15 lakh taxed at 20% and income above Rs. 15 lakh taxed at 30%.