Budget 2024: Salaried class gets relief on tax slabs and standard deduction

Union Finance Minister Nirmala Sitharaman has introduced a comprehensive set of income-tax reforms for the fiscal year 2024-25. The reforms aim to simplify tax laws, encourage compliance, and stimulate economic growth. Highlighting the success of the simplified corporate tax regime, Sitharaman noted that it contributed to 58 percent of corporate tax revenue in the 2022-23 fiscal year. Additionally, two-thirds of personal tax filers have opted for the new tax regime.

The government is undertaking a thorough review of the Income Tax Act, with completion expected within the next six months. This review is poised to bring about significant changes in the tax landscape.

In a move to provide relief to taxpayers, the Finance Minister announced revised tax slabs for personal income tax. The new tax regime maintains a nil tax rate for incomes up to Rs 3 lakh. However, incomes between Rs 3-7 lakh will now be taxed at 5 percent, an adjustment from the previous 5 percent rate on incomes between Rs 3-6 lakh. Incomes between Rs 7-10 lakh will be taxed at 10 percent, compared to the earlier 10 percent rate for incomes between Rs 6-9 lakh. The 15 percent tax rate will now apply to incomes between Rs 10-12 lakh, previously levied on incomes between Rs 9-12 lakh. Tax rates for incomes between Rs 12-15 lakh and above Rs 15 lakh remain unchanged at 20 percent and 30 percent, respectively.

Further relief measures include an increase in the standard deduction from Rs 50,000 to Rs 75,000. Additionally, the deduction for family pensions has been raised from Rs 15,000 to Rs 25,000 under the new tax regime.

Moreover, the Finance Minister announced an increase in the deduction limit for employer contributions to pension schemes under section 80CCD. The deduction rate has been raised from 10 percent to 14 percent of the employee's salary. This means that non-government employees in the new tax regime can now claim a deduction up to 14 percent of their salary, an increase from the previous 10 percent limit.