Union Budget 2024: FM Sitharaman Revises Tax Slabs Under New Tax Regime, Check How Much Tax You Can Save

The Finance Minister said that with these revisions, a taxpayer opting for the new tax regime can save up to Rs 17,500 in personal income tax

Budget 2024: Finance Minister Nirmala Sitharaman tabled the Union Budget 2024 in Parliament today. The FM announced major changes in personal income tax rules. 

In a much awaited move, the FM announced changes to the new tax regime. The revised tax slabs in the new regime are as follows.

Income (Rs)	Revised New Regime (2024-25) (Percentage)
0-3 Lakh	Nil
3-7 Lakh	5%
7-10 Lakh	10%
10-12 Lakh	15%
12-15 Lakh	20%
15 Lakh and above	30%

"As a result of these changes, a salaried employee in the new tax regime stands to save up to Rs 17,500 in income tax," Sitharaman said.

Earlier Rates In New Tax Regime

The earlier version of the new tax regime imposed no tax on individuals with income up to Rs 3 lakh, while those with an income between Rs 3 to 6 lakh were liable to pay tax at 5 per cent. For individuals with an income bracket of Rs 6 to 9 lakh, the system levied a tax of Rs 15,000 along with 10 per cent on the income above Rs 6 lakh.

A tax of Rs 45,000 along with 15 per cent on income over Rs 9 lakh was applicable for taxpayers whose income ranged in the bracket of Rs 9-12 lakh. For income between Rs 12-15 lakh, the system levied a charge of Rs 90,000 in addition to 20 per cent tax on an income exceeding Rs 12 lakh. For individuals with income over Rs 15 lakh, they stood liable to pay Rs 1.5 lakh and a 30 per cent tax on the income exceeding the threshold.

Commenting on the impact of these revisions in tax slabs, T Manish, Research Analyst, SAMCO Securities, noted, "This would benefit directly to the companies in FMCG segment such as HUL, ITC, Dabur, Nestle and second order beneficiaries would be suppliers to these FMCG giants such as Polyplex, Uflex. Further, increased saving would also boost the inflow to wealth management (AMC’s) in the form of SIP's, and to Stock broking companies through brokerage."

Changes In Deduction Limits

In addition to the revisions in the tax slab, the FM also announced an increase in the standard deduction limit for salaried employees. Sitharaman proposed a new deduction threshold at Rs 75,000, up from the earlier limit of Rs 50,000. Further, the deduction on family pension for pensioners was proposed to be raised from Rs 15,000 to Rs 25,000. The minister said that this is expected to provide relief to nearly 4 crore salaried employees and pensioners.

The Budget also proposed to allow the employer to increase the deduction amount for pension from the employee to 14 per cent of the individual's salary, from the earlier limit of 10 per cent. A non-government employee in the new regime shall also be permitted deduction of an amount not exceeding 14 per cent of his/her salary, instead of 10 per cent. 

Adhil Shetty, CEO, Bankbazaar, found the changes in the tax regime to be bittersweet. "With slight enhancements in the standard deduction, new tax regime slabs, and the hike in the tax-free LTCG, you’re going to have marginally higher tax-free income. The budget speech puts the savings at ₹17,500. On the other hand, you’re also going to pay a higher tax rate on both LTCG and STCG, which could impact your significantly if a large part of your earnings come from capital gains. Taxpayers expected some inflation adjustment for the old regime slabs but this is not likely to happen," the executive noted.