New Delhi: Finance Minister Nirmala Sitharaman announced changes to the new income tax regime in her Union Budget 2024 speech. These changes included new income tax slabs for FY 2024-25 and a hike in the standard deduction. The standard deduction was increased from Rs 50,000 to Rs 75,000. Additionally, the tax slab limit for the 5% tax rate was changed from Rs 5 lakh to Rs 7 lakh. The capital gains tax regime was completely revamped with increased tax rates. As expected, no changes were announced in the old income tax regime since the government wants to incentivize the new regime.
The new income tax regime tax slabs are:
- Up to Rs 3 lakh: NIL
- From Rs 3 lakh to Rs 7 lakh: 5%
- From Rs 7 lakh to Rs 10 lakh: 10%
- From Rs 10 lakh to Rs 12 lakh: 15%
- From Rs 12 lakh to Rs 15 lakh: 20%
- Above Rs 15 lakh: 30%
To improve social security benefits, the deduction of expenditure by employers towards NPS is proposed to be increased from 10% to 14% of the employee’s salary. Similarly, a deduction of this expenditure up to 14% of salary from the income of employees in the private sector, public sector banks, and undertakings opting for the new tax regime is proposed to be provided.
As a result of these proposals, revenue of about Rs 37,000 crore – Rs 29,000 crore in direct taxes and Rs 8,000 crore in indirect taxes – will be forgone, while revenue of about Rs 30,000 crore will be additionally mobilized. Thus, the total revenue forgone is about Rs 7,000 crore annually.
