July 23, 2024

Budget 2024: New Income Tax Slabs in the Revised Tax Regime

Finance Minister Nirmala Sitharaman has announced significant relaxations in the income tax slabs under the new tax regime for FY 2024-25 in the Budget 2024. Here’s a detailed breakdown of the new income tax slabs:

Income up to Rs 3 lakh: 0%
Income from Rs 3 lakh to Rs 7 lakh: 5%
Income from Rs 7 lakh to Rs 10 lakh: 10%
Income from Rs 10 lakh to Rs 12 lakh: 15%
Income from Rs 12 lakh to Rs 15 lakh: 20%
Income above Rs 15 lakh: 30%

Key Benefits and Changes

Savings for Taxpayers

The revised slabs will result in savings up to Rs 17,500 for those opting for the new tax regime.

Enhanced Standard Deduction

For salaried individuals and pensioners, the standard deduction limit has been increased to Rs 75,000 from the previous Rs 50,000.

For family pensioners, the standard deduction limit is now Rs 25,000, up from Rs 15,000.

Current Features of the New Tax Regime

The new tax regime, introduced in FY 2020-21, is currently the default option. Here’s what it offers:

1. Income Slabs: The regime includes five income tax slabs, with the highest rate of 30% applicable on income exceeding Rs 15 lakh.

2. Basic Exemption Limit: No tax on income up to Rs 3 lakh.

3. Zero Tax for Incomes up to Rs 7 lakh: Due to a tax rebate of up to Rs 25,000 under Section 87A.

4. Standard Deduction: Rs 50,000 for salaried individuals and pensioners, Rs 15,000 for family pensioners.

5. Surcharge: 25% on incomes above Rs 5 crore.

6. Marginal Tax Relief: For small taxpayers with incomes just exceeding Rs 7 lakh.

Initially optional, the new tax regime became the default from April 1, 2023. Taxpayers now need to opt for the old tax regime specifically to claim various exemptions and deductions.

Choosing Between New and Old Tax Regimes

Salaried Individuals: Must choose between the two regimes each financial year when filing their income tax return. To continue with the old tax regime, select "No for opting under Section 115BAC (new tax regime)" while filing ITR.

Taxpayers with Business Income: Cannot switch between the two regimes annually. To remain under the old tax regime, they must submit Form 10-IEA. They can switch to the new tax regime once, but cannot revert to the old regime afterwards.

Stay updated with these latest changes and make informed decisions to optimize your tax savings.