Income Tax Slab Rate for FY 2024-25 Highlights: Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 in Parliament on Tuesday. Expectations were high that the Modi government would announce some big bang tax reforms benefitting the middle class and salaried taxpayers. But the FM refrained from making any big tax relief announcements, baring a few under the New tax Regime. Presenting her seventh straight budget, the FM announced a hike in Standard Deduction to Rs 75,000 from Rs 50,000 and brought some changes to the tax slabs under the new tax regime. The government did not hike the basic tax exemption limits or introduce any new deduction benefits under the new tax regime, which has already been adopted by two-thirds of taxpayers.
Income Tax Slab Rate for AY 2024-25 Live Updates: Full coverage on Income Tax Slab for AY 2024-25 for Salaried Person, Senior Citizen Announcements, New Tax Regime Slabs
If your are a high-income earners, especially with incomes more than Rs 10 lakh per annum, you should stay in the old tax regime as it continues to provide more deduction and exemption benefits.
Under the New Tax Regime, individuals with earnings of up to Rs 7.75 lakh will not pay income tax after the latest changes in tax slabs and hike in Standard Deduction from Rs 50,000 to Rs 75,000. "New tax regime has been made further attractive for salaried employees through 2 key changes - Change in the tax slabs & increase of standard deduction from 50,000 to 75,000," says Poorva Prakash, Partner, Deloitte India.
The increase in capital gains tax and in the securities transaction tax (STT) on derivatives have hit market sentiment, say market experts even as they hope this effect will not last long. This effect is expected to be temporary, with the overarching fiscal strategy set to support a stable inflationary environment and foster enduring positivity in financial markets, according to Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers.
In the Union Budget 2024-25, FM Nirmala Sitharaman made some tweaking with new tax regime, hiking standard deduction, changing slabs and raising capital gains tax.
Revised tax slabs on income under new tax regime are as follows:
Up to Rs 3 lakh: Nil
Between Rs 3 lakh and Rs 7 lakh: 5%
Between Rs 7 lakh and Rs 10 lakh: 10%
Between Rs 10 lakh and Rs 12 lakh: 15%
Between Rs 12 lakh and Rs 15 lakh: 20%
Income above Rs 15 lakh: 30%
These changes in tax slabs and enhancement of Standard Deduction to Rs 75,000 will ensure that taxpayers save up to Rs 17,500 additionally under the new tax regime.
In the Budget 2024-25, Finance minister Nirmala Sitharaman has promised central government employees 'resolution' on the National Pension System matter. Central government employees who joined services after 2004 have been demanding restoration of Old Pension Scheme and scrapping the NPS. The government has so far not agreed to employees' demand to restore the pension under CCS (Pension) Rules, 1972 (now 2021) to the central government employees recruited on or after 1st January, 2004.
Recently, the All India Railwaymen’s Federation (AIRF) wrote a letter to the Centre, stating that over 20 lakh civilian central government employees are covered under the NPS and every month 10% of their basic pay and DA goes towards NPS contribution, which reduces their take home salary. "The government has so far not agreed to our demand to scrap NPS and to restore the pension under CCS (Pension) Rules, 1972 (now 2021) to the central government employees recruited on or after 1st January, 2004," it said in the letter.
Now onwards all rental income of individual taxpayers from residential properties need to be showed under the head 'income from house property' and not as 'income from business or profession', according to the Budget document.
While the changes proposed under New tax regime in Budget 2024 would bring cheer, the increase in capital gain tax rates for listed securities may dampen the spirit of the investors, according to Divya Baweja, Partner, Deloitte India.
The tax rate for short term and long-term capital gains on STT paid listed securities and units of equity-oriented funds has increased from 15% and 10% to 20% and 12.5%, respectively; however, the tax rate for long term capital gains on all other assets has been reduced from 20% to 12.5%. Further, the exemption of Rs 1 lakh on long-term capital gain on STT paid listed securities and units of equity-oriented funds has been increased to Rs 1.25 lakh.
The FM's decision to remove the indexation benefit for long-term capital gains (LTCG) tax on real estate could lead to a higher tax burden on real estate transactions and negatively impact investor returns, caution realty players. This decision will also create a short-term bearish outlook for the real estate sector, they said.
FM Sitharaman surprised many when she announced the removal of the indexation benefit for capital gains tax on property sales as well as hike in long-term capital gains tax.
With rationalisation of rate to 12.5%, indexation available under second proviso to section 48 is proposed to be removed for calculation of any long-term capital gains which is presently available for property, says CA Dr. Suresh Surana.
With the latest changes effected through changes in Standard Deduction and tax slabs, the salaried taxpayers will see fresh savings to the tune Rs 17,500 in taxes. The math behind these savings is compared to the existing tax rates under the new regime.
Govt has further increased benefits under the New Tax Regime, indicating that the Old Tax Regime will be scrapped sooner or later. The FM in her budget speech also revealed that two-thirds of taxpayers have already shifted to New Tax Regime, which on Tuesday saw enhancement of Standard Deduction by Rs 25,000 and widened tax slabs.
On being asked about the old tax regime, the FM said: "There is no decision yet on when the old tax regime will be scrapped."
Income from the buyback of shares will now be chargeable as dividend in the hands of the recipient investor, with the cost treated as a capital loss, introducing a new dynamic for investment strategies. The increase in Securities Transaction Tax (STT) rates on options and futures could also deter frequent trading.
FM Sitharaman informed that the committee to review the NPS has made considerable progress in its work. The Staff Side of the National Council of the Joint Consultative Machinery for Central Government Employees have taken a constructive approach, she added. A solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens.
The committee led by Finance Secretary T V Somanathan was entrusted with the responsibility to look into the demand for a return to the OPS.
Income from the buyback of shares will now be chargeable as dividend in the hands of the recipient investor, with the cost treated as a capital loss, introducing a new dynamic for investment strategies. The increase in Securities Transaction Tax (STT) rates on options and futures could also deter frequent trading, says CA Sakshi Jain.
FM Sitharaman has announced 3 schemes to boost employment through retirement fund body EPFO for new entrants in the organised sector with a total central outlay of Rs 1.07 lakh crore.
Short term gains on specified financial assets will attract a tax rate of 20% instead of 15%. Long-term gains on all financial and non-financial assets will be levied 12.5% tax. For the benefit of the lower and middle-income classes, it is proposed that the limit of exemption of capital gains on certain listed financial assets be increased from Rs 1 lakh to Rs 1.25 lakh per year, says FM Sitharaman.
Finance Minister Nirmala Sitharaman has effected some changes to tax slabs under the new tax regime. Now, taxpayers earning up to Rs 3 lakh will pay NIL tax. On Rs 3 lakh to Rs 7 lakh income, 5% income tax would be imposed and Rs 7 lakh to Rs 10 lakh income would attract 10% tax. Those earning Rs 10 lakh to Rs 12 lakh would pay 15% tax and those with an annual income of Rs 12 lakh to Rs 15 lakh would shell out 20% tax. 30% tax will be levied on income above Rs 30%.
With this tax rate, an individual earning up to Rs 10 lakh will save Rs 10,000 in taxes if he opts for new tax regime. Earlier, the same income was attracting a tax of Rs 57,500 against Rs 47,500 now.
The abolition of Angel Tax is a much-awaited move by the finance minister. This will boost the entire start-up ecosystem and is viewed as pro-business and pro-innovation measures that will stimulate the economic growth and job creation, says Sandeep Agrawal, Director and Co-Founder, TeamLease RegTech.
FM Sitharaman announced a comprehensive review of the Income-Tax Act, 1961. The purpose is to make the Act concise, lucid, easy to read and understand, she said, adding that this will reduce disputes and litigation, thereby providing tax certainty to the tax payers. The comprehensive review of the Income Tax Act will also bring down the demand embroiled in litigation.
As per data available till now for the last fiscal, more than two-thirds have availed the new personal income tax regime, Finance Minister Nirmala Sitharaman said in her Budget speech. It has been our endeavour to simplify taxation, she said.
Finance Minister Nirmala Sitharaman proposed raising capital gains exemption limit on certain financial assets to Rs 1.25 lakh per year for middle and upper middle class.
Taxpayers earning Rs up to Rs 3 lakh will pay NIL tax. On Rs 3 lakh to Rs 7 lakh income, 5% income tax would be imposed and Rs 7 lakh to Rs 10 lakh income would attract 10% tax. Those earning Rs 10 lakh to Rs 12 lakh would pay 15% tax and those with an annual income of Rs 12 lakh to Rs 15 lakh would shell out 20% tax. 30% tax will be levied on income above Rs 30%.
FM Sitharaman raised the Standard Deduction to Rs 75,000 from the existing Rs 50,000 under the new tax regime. Those earning Rs 12 lakh to Rs 15 lakh under the new tax regime would now be taxed at the rate of 20%. Besides, the govt has proposed raising the long-term capital gains (LTCG) to 12.5% from 10%.
The government has raised the Standard Deduction limit to Rs 75,000 from the existing Rs 50,000. It was expected that the FM would hike the Standard Deduction to Rs 1 lakh under the new tax regime.
FM Sitharaman proposed raising the long-term capital gains to 12.5% from 10% in the Budget 2024-25. An income tax cut is expected in the Budget, which could help taxpayers save money and have more disposable income at their disposal.
Salaried taxpayers are now anticipating an overhaul of the income tax slabs under both new and old tax regimes in the Union Budget 2024. In the Union Budget 2023, adjustments to the new personal tax regime included increasing the basic exemption limit to Rs 3 lakh from Rs 2.5 lakh and reducing the surcharge for high-income earners. Under the old tax regime, there were no changes made. Now, taxpayers are hoping that the government will initiate substantial measures, including changes in the tax slab, for the taxpayers opting for the old tax regime in this budget. This could involve raising the income tax exemption limit to Rs 5 lakh to align with the new tax regime, which currently has tax rates ranging between 5% and 30%. Individual taxpayers also expect an increase in Section 80C tax deduction benefit under the Income Tax Act, 1961, which currently allows for a reduction in taxable income up to a maximum limit of Rs 1.5 lakh through investments or specified expenditures.
Here are some FAQs:
Q. What are the changes announced in income tax slabs under the new tax regime in the Union Budget 2024?
Ans: In the Union Budget 2024, FM Sitharaman is likely to revise income tax slabs to bring some relief to middle-class taxpayers. The new tax slabs under the new tax regime will cut the tax burden and simplify compliance for taxpayers.
Q. Has the standard deduction for salaried taxpayers increased in this budget?
Ans: FM Sitharaman is expected to increase the standard deduction for salaried taxpayers. It will provide additional relief and increase disposable income for taxpayers.
Q. What are the new deduction and exemption benefits introduced for middle-class taxpayers?
Ans. The budget 2024 may introduce new deduction and exemption benefits, including higher limits for home loan interest and medical expenses. These measures are aimed at reducing the overall tax liability for middle-class taxpayers.
Q. What are the major changes in tax slabs and rates in budget 2024?
Ans: There were many changes in tax policies, including revised slabs and increased deductions, that will positively impact middle-class taxpayers.
Q. Are there any new tax incentives for individual taxpayers announced in this budget?
Ans: The budget has announced new savings schemes and incentives aimed at encouraging investment and saving among individual taxpayers. These include higher interest rates on specific savings schemes and additional tax benefits for long-term investments.
Q. Which tax regime is more beneficial for salaried taxpayers after the recent budget changes?
Ans: The budget changes have made the new tax regime more attractive for many salaried taxpayers, especially those who do not claim many deductions. However, the old tax regime may still be beneficial for those with significant deductions and exemptions.
Q. Can you switch between the new and old tax regimes for the upcoming financial year? If so, how?
Ans: Taxpayers can choose to switch between the new and old tax regimes for the upcoming financial year. The process involves selecting the preferred regime while filing your income tax return and ensuring compliance with the rules applicable to that regime.
Q. Have there been any changes in the tax rates or deductions under the new tax regime in this budget?
Ans: The budget may introduce changes in the tax rates and deductions under the new tax regime. These changes are designed to make the new regime more competitive and attractive, offering lower rates and simplified compliance.
Income Tax Slab for FY 2024-25 - New Tax Regime Slabs Live Updates Small taxpayers, who have not seen any major tax changes in the past few years, are expecting the Modi government to fulfil their wishes on the tax relief front in this Budget. They have been eagerly hoping for tax relief and concessions in the Budget for FY 2024-25. Even in the interim budget presentation early this year ahead of the Lok Sabha polls, under the Modi 2.0 regime, there were no major tax relief measures announced for taxpayers. In the interim budget, the Modi government continued existing tax rates and decided to uphold the current capital gains framework without any alterations.