How Union Budget 2024 new tax regime eases tax burden for salaried class?

One of the major changes is the increase in the standard deduction for those opting for the new tax regime. The standard deduction has been raised from ₹50,000 to ₹75,000.

Union Budget 2024: In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced major changes to the new tax regime that will benefit salaried individuals. These changes are designed to make the new regime more attractive and encourage taxpayers to shift from the old system. Here’s how these changes will impact salaried taxpayers:

Standard deduction increased

One of the major changes is the increase in the standard deduction for those opting for the new tax regime. The standard deduction has been raised from ₹50,000 to ₹75,000. This means that salaried taxpayers can now deduct ₹75,000 from their total income before calculating their taxable income. This increase in the standard deduction will help reduce the overall tax burden for many individuals.

Changes in tax slabs

The new tax regime also features wider tax slabs for incomes below ₹10 lakh, providing further relief to taxpayers. Here’s a breakdown of the new tax slabs:

• Income up to ₹3 lakh: No tax (unchanged)
• ₹3 lakh to ₹7 lakh: 5% tax (previously up to ₹6 lakh)
• ₹7 lakh to ₹10 lakh: 10% tax (previously up to ₹9 lakh)
• ₹10 lakh to ₹12 lakh: 15% tax (previously up to ₹9 lakh)
• ₹12 lakh to ₹15 lakh: 20% tax (unchanged)
• Above ₹15 lakh: 30% tax (unchanged)

These changes mean that individuals with taxable income of more than ₹6 lakh will save ₹5,000 due to the extension of the 5% tax slab. Similarly, those with income exceeding ₹9 lakh will save another ₹5,000 thanks to the expanded 10% slab.

Impact on tax liability

To illustrate, let’s consider a person earning ₹20 lakh annually. With the enhanced standard deduction, their taxable income would be ₹19.25 lakh under the new regime. Due to the widened tax slabs and increased standard deduction, their tax liability would reduce from ₹2,85,000 to ₹2,67,500. This results in a saving of ₹17,500, as mentioned by the Finance Minister in her speech.

Relief for pensioners

The budget also offers relief to pensioners. Those opting for the new tax regime can now claim an enhanced deduction of ₹25,000 against the family pension, up from the previous ₹15,000. This change aims to provide additional support to retired individuals.

The government estimates that around four crore salaried individuals and pensioners will benefit from these changes if they opt for the new tax regime. By making these adjustments, the government hopes to simplify the tax process and offer financial relief to a large section of the population.

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