Budget 2024: Transformative Changes in Tax Regime and Deductions Announced
New Delhi: Budget 2024 in a move set to bring significant relief to salaried individuals and pensioners, Finance Minister Nirmala Sitharaman unveiled major updates in the 2024 Budget concerning the income tax structure. The revised tax slabs and increased deductions aim to ease the financial burden on taxpayers, reflecting the government’s continued commitment to simplifying the tax regime and enhancing fiscal relief.
One of the most notable changes announced is the revision of tax slabs under the new tax regime. The new structure is designed to benefit a broad spectrum of income earners, making tax liabilities more manageable. The revised slabs are as follows:
- Income up to ₹3,00,000: Nil
- Income from ₹3,00,001 to ₹7,00,000: 5%
- Income from ₹7,00,001 to ₹10,00,000: 10%
- Income from ₹10,00,001 to ₹12,00,000: 15%
- Income from ₹12,00,001 to ₹15,00,000: 20%
- Income above ₹15,00,000: 30%
This new structure is expected to significantly reduce the tax burden for many individuals. According to Finance Minister Sitharaman, those opting for the new tax regime stand to save up to ₹17,500, providing considerable financial relief.
In addition to the revised tax slabs, the Finance Minister announced an increase in the standard deduction and family pension deductions. The standard deduction for salaried employees has been raised from ₹50,000 to ₹75,000. This increase is aimed at providing a more substantial tax break to salaried individuals, thereby reducing their taxable income and overall tax liability.
For family pensioners, the deduction has been increased from ₹15,000 to ₹25,000 under the new tax regime. This move is expected to offer additional relief to pensioners, acknowledging their contribution and providing financial support.
It’s important to note that these changes apply exclusively to the new tax regime. The standard deduction under the old tax regime remains unchanged at ₹50,000. This distinction ensures that those who have already adapted to the old tax structure are not disadvantaged by the new changes.
In her budget speech, Finance Minister Sitharaman also announced a comprehensive review of the Income Tax Act of 1961. This review aims to make the Act easier to understand and navigate, reducing uncertainty and the potential for litigation. The government’s focus on simplifying tax structures and rules reflects a broader strategy to improve the efficiency of the tax system and make it more accessible to taxpayers.
Further enhancing the budget’s impact, the Finance Minister revealed an increase in the National Pension System (NPS) deduction on employers’ contributions to employees’ basic salaries. The deduction has been raised from 10% to 14%, applying to both public and private sector companies under the new regime. This change is intended to bolster retirement savings and provide additional benefits to employees.
The Budget 2024 also includes the introduction of Vivaad se Vishwas Scheme 3.0, designed to address pending tax disputes and offer resolution mechanisms to taxpayers. This scheme aims to streamline the process of settling tax disputes, thereby reducing litigation and ensuring more efficient tax administration.
Overall, the Budget 2024 brings transformative changes to the income tax landscape, focusing on increased deductions, revised tax slabs, and enhanced benefits for pensioners and salaried individuals. These updates are set to provide substantial financial relief and simplify the tax process, aligning with the government’s ongoing efforts to make taxation more equitable and less burdensome.
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