Income Tax Changes in Budget 2024: Key Announcements

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In Budget 2024, Finance Minister Nirmala Sitharaman announced significant changes to the income tax regime for the financial year 2024-25. This is the first budget of the Modi government in its third term, featuring revised tax slabs and increased standard deductions.

New Tax Slabs

  1. Income up to ₹3,00,000: No tax
  2. ₹3,00,001 – ₹7,00,000: 5% tax
  3. ₹7,00,001 – ₹10,00,000: 10% tax
  4. ₹10,00,001 – ₹12,00,000: 15% tax
  5. ₹12,00,001 – ₹15,00,000: 20% tax
  6. ₹15,00,001 and above: 30% tax

Standard Deductions:

  • For salaried individuals and pensioners: Increased to ₹75,000 from ₹50,000.
  • For family pensioners: Increased to ₹25,000 from ₹15,000.
  • Employer’s NPS contribution for private sector employees: Increased to 14% from 10%.

Surcharge Rates:

  • Up to ₹50 lakh: No surcharge
  • ₹50,00,001 – ₹1 crore: 10% surcharge
  • ₹1,00,00,001 – ₹2 crore: 15% surcharge
  • Above ₹2 crore: 25% surcharge

Read More: Budget proposals to play catalyst role for growth

Old Tax Regime

No changes were made to the old tax regime, which continues to offer various tax exemptions and deductions such as:

  • Section 80C: Up to ₹1.5 lakh
  • Section 80D: Up to ₹25,000/₹50,000
  • Section 80TTA: Up to ₹10,000
  • Section 80CCD (1B): Up to ₹50,000
  • Tax exemptions on HRA and LTA.

Income Tax Slabs under Old Tax Regime:

  • Individuals below 60 years:
  • Up to ₹2,50,000: No tax
  • ₹2,50,001 – ₹5,00,000: 5%
  • ₹5,00,001 – ₹10,00,000: 20%
  • Above ₹10,00,000: 30%
  • Senior citizens (60-80 years):
  • Up to ₹3,00,000: No tax
  • ₹3,00,001 – ₹5,00,000: 5%
  • ₹5,00,001 – ₹10,00,000: 20%
  • Above ₹10,00,000: 30%
  • Super senior citizens (above 80 years):
  • Up to ₹5,00,000: No tax
  • ₹5,00,001 – ₹10,00,000: 20%
  • Above ₹10,00,000: 30%

Tax Rebates:

  • New tax regime: Tax rebate of up to ₹25,000 for incomes not exceeding ₹7 lakh under Section 87A.
  • Old tax regime: Tax rebate of up to ₹12,500 for incomes not exceeding ₹5 lakh under Section 87A.

Cess and Surcharge:

  • A 4% cess on income tax is applicable in both regimes.
  • Different surcharge rates apply for incomes exceeding ₹50 lakh in both regimes.

Conclusion:
The Budget 2024 introduced notable changes in the new tax regime, providing higher standard deductions and revised tax slabs, while maintaining the existing structure of the old tax regime. These measures aim to offer more flexibility and benefits to taxpayers, especially salaried individuals and pensioners.

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