Union Budget 2024: Sitharaman revises new tax regime slabs, increases standard deduction

New Delhi: Finance Minister Nirmala Sitharaman announced significant changes in the new tax regime as part of the 2024 Union Budget on Tuesday. The standard deduction has been raised from Rs 50,000 to Rs 75,000, offering substantial relief to salaried individuals.

Revised tax slabs

The Finance Minister also revised the tax slabs, potentially allowing salaried employees to save up to Rs 17,500. This change aims to provide more disposable income and higher tax savings for salaried individuals.

Current tax slabs for FY 2023-24

• Income up to Rs 3 lakh: Nil
• Rs 3 lakh to Rs 6 lakh: 5%
• Rs 6 lakh to Rs 9 lakh: 10%
• Rs 9 lakh to Rs 12 lakh: 15%
• Rs 12 lakh to Rs 15 lakh: 20%
• Above Rs 15 lakh: 30%

Increased deduction on family pension

The budget also included an increase in the deduction on family pension from Rs 15,000 to Rs 25,000. These changes are expected to benefit approximately four crore salaried individuals and pensioners.

Financial assets to be taxed at 20 per cent

Short-term gains on certain financial assets will now be taxed at 20%, while long-term gains on all financial and non-financial assets will attract a 12.5% tax rate. Listed financial assets held for over a year have been reclassified as long-term.

Abolition of angel tax

In a move to support the start-up ecosystem, the government has abolished the angel tax for all classes of investors. This tax was previously levied on capital raised via the issuance of shares by unlisted companies if the share price exceeded the fair market value.

A simplified tax regime

To boost cruise tourism, a simpler tax regime has been proposed for foreign shipping companies operating domestic cruises in India.

Comprehensive review of tax laws

Ms. Sitharaman also announced a comprehensive review of the Income Tax Act of 1961, aimed at making it easier to understand and reducing uncertainty and litigation potential. The review is expected to be completed within six months.

Key proposals in the finance bill

• Simplified tax regime for charities
• Merging of two tax exemption regimes for charities
• Reduction in TDS rate from 5% to 2%
• Withdrawal of 20% rate on repurchase of units by mutual funds or UTI
• Reduction of TDS rate on e-commerce operators from 1% to 0.1%
• Decriminalization of delayed TDS payments up to the due date of filing

Waht will be the implications for the middle class?

These measures aim to provide relief to the middle class, which had been eagerly awaiting changes in tax slabs and exemption limits. Despite expectations, the exemption limit remains unchanged, and there are no changes in the old tax regime slabs. The budget, however, strives to balance stimulating economic growth with providing tax relief.4o