Relief for salaried class under new tax regime; 50 pc hike in standard deduction to Rs 75,000

PTI, Jul 23, 2024, 2:03 PM IST

Credit: PTI photo

NEW DELHI: In sops for the middle class, Finance Minister Nirmala Sitharaman on Tuesday hiked standard deduction by 50 per cent to Rs 75,000 and tweaked tax slabs under the new income tax regime to provide more money in the hands of salaried class with a view to boost consumption.

She said salaried employees in the new tax regime could save up to Rs 17,500 in income tax annually following the changes announced in the Budget.

The standard deduction for salaried employees is proposed to be increased from Rs 50,000 to Rs 75,000 annually. Similarly, deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000.

“This will provide relief to about four crore salaried individuals and pensioners,” Sitharaman said in her Budget speech.

In the last fiscal, more than two-thirds individual taxpayers have availed the new personal income tax regime. Over 8.61 crore I-T returns were filed in 2023-24 fiscal.

The new tax slabs under the new income tax regime will be effective from April 1, 2024. (Assessment Year 2025-26).

Sitharaman said income of up to Rs 3 lakh will continue to be exempted from income tax under the new regime.

As per the proposal, a 5 per cent tax will be levied on income between Rs 3-7 lakh, 10 per cent between Rs 7-10 lakh, 15 per cent for Rs 10-12 lakh.

However, 20 per cent tax will continue to be levied on income between Rs 12-15 lakh and 30 per cent for income above Rs 15 lakh.

Under the existing new I-T regime, a 5 per cent tax is levied on income between Rs 3-6 lakh, 10 per cent for income between Rs 6-9 lakh.

Income between Rs 9-12 lakh and Rs 12-15 lakh is subject to 15 per cent and 20 per cent tax, respectively. A 30 per cent I-T would be applicable on income above Rs 15 lakh.