Union Budget 2024: Comprehensive Guide to Income Tax Changes and Relief

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, has introduced significant changes to the income tax structure, particularly under the new tax regime. These changes aim to provide relief to millions of taxpayers, especially salaried employees and pensioners.

Key Highlights

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  1. Tax relief for approximately 4 crore salaried individuals and pensioners
  2. Potential tax savings of up to ₹17,500 for salaried employees under the new tax regime
  3. Increase in standard deduction from ₹50,000 to ₹75,000

Revised Tax Slabs in New Tax Regime

The government has announced a revised tax slab structure under the new tax regime:

Income Range Tax Rate
₹0 – ₹3 Lakhs Nil
₹3 – ₹7 Lakhs 5%
₹7 – ₹10 Lakhs 10%
₹10 – ₹12 Lakhs 15%
₹12 – ₹15 Lakhs 20%
Above ₹15 Lakhs 30%

Enhanced Standard Deduction

A major change in the new tax regime is the increase in standard deduction:

  • Previous standard deduction: ₹50,000
  • New standard deduction: ₹75,000

This ₹25,000 increase in standard deduction is expected to provide significant relief to salaried employees.

Potential Tax Savings

Under the new tax regime, salaried employees can potentially save up to ₹17,500 in income tax. This saving is a result of the combined effect of the revised tax slabs and the increased standard deduction.

Impact on Taxpayers

Salaried Employees

  • Benefit from increased standard deduction
  • Potential for lower tax liability under new slabs
  • Simplified tax calculation with fewer deductions to track

Pensioners

  • Relief through revised tax slabs
  • Potential for lower overall tax burden

Middle-Income Earners

  • May find the new regime more beneficial due to lower tax rates in middle slabs
  • Need to evaluate benefits against loss of deductions available in old regime

Comparing Old vs New Tax Regime

While the new tax regime offers lower tax rates and increased standard deduction, it’s important to note that it comes at the cost of forgoing several deductions and exemptions available under the old regime. Taxpayers should carefully evaluate their individual circumstances to determine which regime is more beneficial for them.

Conclusion

The income tax changes announced in the Union Budget 2024 represent a significant shift towards simplification of the tax structure while providing relief to a large number of taxpayers. The increased standard deduction and revised tax slabs under the new regime offer potential savings, particularly for salaried employees and middle-income earners. However, the choice between the old and new regimes will depend on individual financial situations and the value of deductions available under the old regime.

As these changes take effect, it’s advisable for taxpayers to consult with financial advisors to make informed decisions about their tax planning strategies for the coming fiscal year.