Question: What are the changes proposed for individual taxpayers in the New Tax Regime vide Budget 2024?
Response given by CA (Dr.) Suresh Surana: One of the significant announcements in the Budget 2024 for individual taxpayers is the increase in the standard deduction from Rs 50,000 to Rs 75,000. It is notable that this benefit of increased standard deduction is available only to those assesees who pay tax under the new default tax regime u/s 115BAC.
In case of taxpayers who continue to opt for the old tax regime, the standard deduction would continue to be the same at Rs 50,000.
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Some other measures to incentivise the new tax regime include the following:
a. Proposed Changes in the Tax Slabs:
b. Deduction u/s 80CCD(2) by Employer’s contribution in Pension Scheme increased from 10% to 14%
Further, it is proposed to increase the amount of deduction allowed to an employer in respect of his contribution to a pension scheme referred to in section 80CCD(2), from the extent of 10% to 14% of the salary of the employee. In case of employees opting for the old tax regime, the benefit of deduction would continue at 10% (for non-government employees).
It is pertinent to note that under both regimes the current deduction available is 14% in case of government employees.
c. Family pension deduction limit proposed to be increased to Rs 25,000:
The Budget 2024 proposes to increase the deduction limit available towards family pension from Rs 15,000 to Rs 25,000 for those opting for the new tax regime.