As the Union Finance Minister, Nirmala Sitharaman, finally presented the much awaited Union Budget 2024 in the Lok Sabha today (July 23) at 11 AM with a Budget Speech lasting 80 minutes with many key schemes, changes and important announcement, one of the important area that the country's taxpayers keenly awaited was the personal tax section.
Bring a relief to taxpayers with revamped income tax slabs and deductions, the Finance Minister in the Union Budget 2024-2-25, announced a revised income tax slabs.
Here is a breakdown of the new tax regime:
- Up to Rs 3 lakh: No tax (unchanged)
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- Rs 3 lakh to Rs 7 lakh: 5 per cent (previously 5 per cent up to Rs 6 lakh)
- Rs 7 lakh to Rs 10 lakh: 10 per cent (previously 10 per cent up to Rs 9 lakh)
- Rs 10 lakh to Rs 12 lakh: 15 per cent (new slab)
- Rs 12 lakh to Rs 15 lakh: 20 per cent (unchanged)
- Above Rs 15 lakh: 30 per cent (unchanged)
In a common man understanding, for example if an individual is earning Rs 8 lakh annually under the previous tax regime, they would have paid 5 per cent tax on income up to Rs 6 lakh and 10 per cent on the remaining Rs 2 lakh.
But now under the new regime, they will pay 5 per cent on income up to Rs 7 lakh and 10 per cent on the remaining Rs 1 lakh, resulting in a lower tax outgo.
Increased Standard Deductions and Pension Relief
Furthermore, to support salaried employees and pensioners, the Finance Minister proposed two key changes, which includes:
1. Standard Deduction Increase: In the Budget 2024, the standard deduction for salaried individuals has been increased from Rs 50,000 to Rs 75,000.
This means, for example, if an employee is earning Rs 10 lakh annually will now be able to reduce their taxable income by Rs 75,000 instead of Rs 50,000, thus by paying tax on Rs 9.25 lakh instead of Rs 9.5 lakh.
2. Family Pension Deduction: As per the latest announcement, the pensioners can now claim a deduction of Rs 25,000 on family pensions, up from the previous Rs 15,000.
For example, a if a pensioner is receiving a family pension of Rs 2 lakh annually will now be taxed on Rs 1.75 lakh instead of Rs 1.85 lakh.
National Pension System (NPS) Contributions
In addition, the government has also increased the deduction limit for employers contribution to the NPS from 40 per cent to 14 per cent of the employees salary.
This will have a benefit for non-government employees under the new tax regime.
For instance, if an employee is earning Rs 5 lakh annually, they can now under this claim a deduction of up to Rs 70,000 for NPS contributions, instead of the previous Rs 50,000.
