Income tax slab: In Budget 2024, Finance Minister Sitharaman introduced key changes to the income tax slabs under the new tax regime to make them more attractive for taxpayers. Along with adjustments in the tax slabs, the standard deduction limit was increased. Modifications were also made to the family pension and the employee's contribution to the National Pension Scheme (NPS). However, the old tax regime remains unchanged.
The income tax slabs have been revamped under the new tax regime. There is no tax on income up to ₹3 lakh. The tax rate is set at 10% for income between ₹7 lakh and ₹10 lakh, and 5% for earnings between ₹3 lakh and ₹7 lakh. 15% tax will be applied to income between ₹10 lakh and ₹12 lakh, while 20% tax will be applied to income between ₹12 lakh and ₹15 lakh. The case of income above ₹15 lakh, the tax rate stays at 30%.
Up to ₹3 lakh - Nil
₹3-7 lakh - 5%
₹7-10 lakh - 10%
₹10-12 lakh - 15%
12-15 lakh - 20%
Above ₹15 lakh - 30%
Under the new tax regime, the government increased the standard deduction ceiling from ₹50,000 to ₹75,000
The standard deduction limit for family pensioners from ₹15,000 to ₹25,000.
Under Section 80CCD(2), up to 10% of the employee’s basic salary in the pension scheme is tax-free. For taxpayers who have opted for the new tax regime, this limit is higher at 14%.
Under the new tax regime, the government has revamped the income tax slabs, allowing taxpayers who choose this option to save up to ₹17,500 annually.
Here's how the ₹17,500 savings is calculated for a taxpayer earning ₹15,00,000 in the 30% tax bracket:
For ₹3-6 lakh income: The current tax is ₹15,000, while the new rate is ₹20,000, resulting in an additional ₹5,000 tax.
For ₹9-12 lakh income: The current tax is ₹45,000, but under the new slabs, it is ₹30,000, resulting in a saving of ₹15,000.
Net saving from both changes: ₹15,000 - ₹5,000 = ₹10,000.
Standard Deduction: The additional ₹25,000 deduction results in ₹7,500 savings (30% of ₹25,000).
Adding the savings from steps 3 and 4, the total savings amount to ₹17,500.
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