Presenting the Union Budget 2024 on Tuesday (23 July, 2024), Finance Minister Nirmala Sitharaman introduced some changes to income tax slabs and increased the standard deduction for taxpayers under the New Tax Regime.
While the middle class had high hopes for income tax reforms to reduce their tax burden, Sitharaman left the old tax regime unchanged.
The Finance Minister announced a 50% hike in the standard deduction, raising it to Rs 75,000 under the new regime. She also adjusted the income tax slabs under the new tax regime with an aim to boost consumption by putting more money in the hands of the salaried class.
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“In the new tax regime, the tax rate structure is proposed to be revised as follows – 0 to 3 lakh rupees Nil, 3 to 7 lakh rupees 5%, 7 to 10 lakh rupees 10%, 10 to 12 lakh rupees 15%, 12 to 15 lakh rupees 20%, and above 15 lakh rupees 30%,” said Finance Minister.
Previous Tax Slab
| Income Tax Slab (INR) | Income Tax Rate (%) |
| 0 – 3 lakh | Nil |
| 3 – 6 lakh | 5% |
| 6 – 9 lakh | 10% |
| 9 – 12 lakh | 15% |
| 12 – 15 lakh | 20% |
| Above 15 lakh | 30% |
New Tax Slab
| Income Tax Slab (INR) | Income Tax Rate (%) |
| 0 – 3 lakh | Nil |
| 3 – 7 lakh | 5% |
| 7 – 10 lakh | 10% |
| 10 – 12 lakh | 15% |
| 12 – 15 lakh | 20% |
| Above 15 lakh | 30% |
These new income tax slabs under the revised income tax regime will be effective from April 1, 2024, for the Assessment Year 2025-26. Sitharaman confirmed that income up to Rs 3 lakh will remain exempt from income tax under the new regime.
Due to the new tax changes, a salaried employee in the new tax regime could save up to Rs 17,500 in income tax.
Other Major Tax Changes
TDS Rate Reduction: The TDS rate on e-commerce operators has been reduced from 1% to 0.1%.
Charity and TDS Simplification: Simplified rules for charities and TDS.
Short-Term Gains Tax: Short-term gains on financial assets will now be taxed at 20%.
Long-Term Gains Tax: Long-term gains on all financial and non-financial assets will attract a tax rate of 12.5%.
Also Read: Big Changes in Capital Gains Taxation: Here’s What FM Sitharaman Said on LTCG, STCG
Capital Gains Exemption: The exemption limit for capital gains on financial assets has been raised from Rs 1 lakh to Rs 1.25 lakh per year.
TCS Credit Adjustment: Credit for TCS will be applied to TDS deducted from salaries.
Decriminalization of TDS Delays: Delays in TDS payments have been decriminalized for defaults until the date of filing.
Removal of Angel Tax: The tax on capital raised through the issue of shares by unlisted companies, known as Angel Tax, has been eliminated.
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