Union Budget 2024 | Tax relief: New regime gets sweeter, standard deductions raised
New Delhi: The Union Budget 2024 brought some relief for the middle class by further sweetening the new tax regime by changing tax slabs and raising standard deductions limit that would help a taxpayer save up to Rs 17,500 in a year.
The standard deduction under the new income tax regime for the financial year 2024-25 will be hiked to Rs 75,000 from the previous year’s Rs 50,000. Deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000 under the new tax regime.
The changes in deduction limits will provide relief to about 4 crore salaried individuals and pensioners, Union Finance Minister Nirmala Sitharaman said while presenting the budget in Lok Sabha.
Credit: DH Illustration
The tax slabs under the new regime have been changed. The income from Rs 3 to 7 lakh will be taxed at 5 per cent; from Rs 7 to 10 lakh at 10 per cent; Rs 10 to 12 lakh at 15 per cent; Rs 12 to 15 lakh at 20 per cent and above Rs 15 lakh at 30 per cent.
Earlier, in the new tax regime 5 per cent tax was applicable for income from Rs 3 to 6 lakh. From Rs 6 to 9 lakh was taxed at 10 per cent; Rs 9 to 12 lakh at 15 per cent; Rs 12 to 15 lakh at 20 per cent and above Rs 15 lakh at 30 per cent.
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The basic exemption limit remains unchanged at Rs 3 lakh. Tax slabs and tax rates under the old income tax regime remain unchanged. Basic exemption limit under the old tax regime remains unchanged at Rs 2.5 lakh. Under the old tax regime income above Rs 10 lakh is taxed at 30 per cent.
“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,” Sitharaman said.
Under the new tax regime a tax rebate of up to Rs 25,000 is provided to a taxpayer. As a result of this, no tax is levied on income up to Rs 7 lakh.
The NPS contribution limit for employers in the private sector has been raised to 14 per cent of an employee's basic salary from the earlier limit of 10 per cent. For the government employees, this limit was already at 14 per cent.
The Finance Minister also announced significant changes in capital gains taxation. Long-term capital gains tax will be increased to 12.5 per cent from 10 per cent. Exemption limit on long-term capital gains on certain financial assets has been increased to Rs 1.25 lakh from earlier Rs 1 lakh.
Short-term capital gains on certain assets will attract 20 per cent tax, while all other gains on financial and non-financial assets will be taxed at income tax rate applicable.
Union Budget 2024 LIVE | Making a record for any Finance Minister, Nirmala Sitharaman presented her 7th consecutive Union Budget on July 23, 2024 under the Modi 3.0 government. This Budget brought tax relief for the middle class, while focusing on jobs through skilling, incentivising employers. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.