New Delhi July 23rd 2024 : In a move aimed at benefiting the middle class, Finance Minister Nirmala Sitharaman announced changes to the New Tax Regime (NTR), offering individual taxpayers savings of up to Rs 17,500 per year. The Union Budget for 2024-25 introduced an increase in the standard deduction from Rs 50,000 to Rs 75,000, along with slight adjustments to the tax slabs under the simplified NTR.
The Old Tax Regime remains unchanged, while the enhanced benefits under the NTR are seen as an effort to attract more salaried taxpayers to the exemption-free framework. The government’s focus has been on promoting the NTR as the preferred option for salaried individuals.
For taxpayers in the highest bracket—those with a taxable income of Rs 15 lakh or more—the enhanced standard deduction will result in savings of Rs 7,500. Additionally, rationalization of tax rates will provide an extra Rs 10,000 in savings for this group, bringing their total savings to Rs 17,500 annually.
Taxpayers with a taxable income above Rs 12 lakh will benefit from rate rationalization, saving Rs 10,000. However, their savings from the increased standard deduction will be lower than those in the top bracket due to differences in applicable income tax rates across various income groups.
The revised tax slabs under the NTR are as follows:
- Rs 0-3 lakh: Nil tax
- Rs 3-7 lakh: 5%
- Rs 7-10 lakh: 10%
- Rs 10-12 lakh: 15%
- Rs 12-15 lakh: 20%
- Above Rs 15 lakh: 30%
These adjustments include changes to the lower tax brackets, with the 5% rate now applicable to incomes between Rs 3-7 lakh, up from the previous Rs 3-6 lakh. The 10% tax rate now covers the Rs 7-10 lakh range, revised from Rs 6-9 lakh, while the 15% rate applies to incomes from Rs 10-12 lakh, updated from Rs 9-12 lakh.
Overall, these changes are designed to provide additional disposable income for the middle class and encourage more taxpayers to opt for the New Tax Regime.
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