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.
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The Modi government has previously attempted to encourage taxpayers to opt for the new tax regime by announcing tax incentives, but these efforts have not yielded the desired results. It is now expected that FM Sitharaman will announce additional tax benefits to attract more taxpayers to choose the new regime. The Union Budget 2023 introduced significant changes to the new personal tax regime, including raising the basic exemption limit from Rs 2.5 lakh to Rs 3 lakh and reducing the surcharge for those earning over Rs 5 crore from 37% to 25%. These adjustments aimed to increase the attractiveness of the new tax regime. However, the tax rates for the old regime remain unchanged, highlighting a clear need for substantial revisions to its tax slabs. FM Sitharaman is also expected to introduce exemptions and 80C deduction benefits under the new tax regime like offered under the old tax regime.
FM Sithraman is expected to increase the basic tax exemption limit to Rs 5 lakh from the current Rs 3 lakh under the new tax regime. Similarly, a similar enhancement may be announced for the old tax regime, which currently provides taxpayers income tax relief on income up to Rs 2.5 lakh annually. If the Modi government raises the basic tax exemption limit to Rs 5 lakh, individuals earning may pay zero income tax on annual income up to Rs 8.5 lakh, provided the tax rebate under Section 87A is continued and the tax slab is adjusted accordingly.
In the pre-budget consultations with various groups, the Finance Ministry received proposals to substantially raise standard deduction rates and deduction limits across different categories, alongside expanding tax brackets. Industry groups advocated for increased tax relief for the middle class, aiming to ensure direct benefits for these individuals. These measures are expected to alleviate financial burdens and empower individuals by boosting their disposable income. By updating long-standing limits, the government can support middle-class families in saving more and making secure investments for the future.
Salaried and middle-class individuals are expecting the Modi government to offer them some relief in the Budget 2024. They are hopeful that FM Sitharaman in her Budget presentation will announce major incentives in the new tax regime, which has been made the default option in the event of non-declaration of preferred tax regime by taxpayers. The government is expected to take more measures to increase the attractiveness of the new tax regime and encourage taxpayers to choose the new tax regime. Also in this Budget 2024-25, the Modi government may announce schemes aimed at supporting middle-class homebuyers are expected to receive substantial boosts, facilitating affordable homeownership options for this segment of the population.
In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman may announce several measures, including on tax relief and pension benefits for government employees, aimed at benefiting the middle class and salaried taxpayers. There is also an anticipation that there might be an increase in the standard deduction amount, providing relief to common man. There may also be a potential restructuring of tax slabs to create a fairer and more balanced tax structure for the middle-income group. Additionally, the budget is likely to introduce provisions to ensure secure and guaranteed pension benefits under the National Pension System (NPS) regime.
Expectations in the Union Budget 2024 include significant tax relief for the middle class and salaried individuals. Experts are of the view that tax relief for salaried taxpayers will enhance purchasing power and boost consumption. The Union Budget 2024 will likely also emphasize rural development through investments in infrastructure and employment, they said, adding that overall the budget may bolster agricultural activities to enhance rural income. Government support during the critical monsoon period will be crucial for stabilizing rural economies and ensuring farmers have access to essential resources. Overall, these income tax relief measures aim to stimulate economic growth and improve the financial well-being of a broad segment of the population.
After the Interim Budget 2024 made no significant announcements on taxes and middle-class relief, there is speculation that Finance Minister Nirmala Sitharaman may offer substantial relief to the middle and salaried classes for the first time in seven years. In the Union Budget 2023, the Modi government announced some relief for salaried individuals by introducing Standard Deduction benefits of Rs 50,000 under the new tax regime, which was ultimately made the default option for taxpayers in the absence of specifying their preferred option. FM Sitharaman will present her seventh consecutive budget on July 23, 2024. This budget presentation tally of seven includes one interim budget presented in February this year ahead of the Lok Sabha polls.
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.