In her Union Budget Speech 2024-25, Finance Minister Nirmala Sitharaman announced a change in tax slabs in the new, simplified tax regime on Tuesday. The changes can help personal taxpayers save up to Rs 17,500.
Union Finance Minister Nirmala Sitharaman on Tuesday made a major announcement with regard to personal income tax in the Budget 2024-25 speech. Sitharaman announced a change in tax rate slabs in the new, simplified tax regime. As per the finance minister, the following will be the structure of the New Tax Regime starting Financial Year 2024-25 and Assessment Year 2025-26. Track Parliament News LIVE Updates
0 to 3 lakh: Nil tax
3 to 7 lakh: 5 per cent
7 to 10 lakh: 10 per cent
10 to 12 lakh: 15 per cent
12 to 15 lakh: 20 per cent
Over 15 lakh: 30 per cent
For the purpose of comparison, the existing tax slabs in New Tax Regime applicable for Assessment Year 2024-25 are as under:
0 to 3 lakh: Nil tax
3 to 6 lakh: 5 per cent
6 to 9 lakh: 10 per cent
9 to 12 lakh: 15 per cent
12 to 15 lakh: 20 per cent
15 lakh and above: 30 per cent
Further, the finance minister announced an increase in the standard deduction available to personal tax payers from FY 2024-25. The standard deduction available under new tax regime has been raised from Rs 50,000 to Rs 75,000.
Also, deduction on family pension has been increased from Rs 15,000 to Rs 25,000.
These proposals will provide relief to 4 crore salaried tax payers and pensioners. A salaried individual will now be able to save up to Rs 17,500 if he/she chooses to file tax return under the New Tax Regime.
The finance minister also announced in her Budget 2024-25 speech that long-term capital gains on financial and non-financial assets will attract a tax rate of 12.5 per cent. The government has also announced a hike in capital gains exemption limit on certain financial assets to Rs 1.25 lakh per year for middle and upper middle class.
The FM further said during the speech that short-term capital gains on certain financial assets will attract a tax rate of 20 per cent. The minister also announced a hike in STT (securities transaction tax) on F&O (futures and options) securities by 0.02 per cent and 0.1 per cent.
The government has also raised deduction limit to 14 per cent from 10 per cent for employers' contribution for NPS.
The FM announced that the government has undertaken a comprehensive review of the Income Tax Act to make it easy to read.
The minister said it has been the endeavour of the Modi government to simplify taxation and which is why they had introduced the simplified tax regime.
As per data available, last year, a two-third of personal tax payers used the New Tax Regime to file their returns, said Sitharaman. As many as 58 per cent corporates in Financial Year 2022-23 used the simplified tax regime.