In a noteworthy update to the FY25 Budget, Finance Minister Nirmala Sitharaman has announced substantial tax relief for salaried employees under the new tax regime. This adjustment promises to save individuals up to Rs 17,500 annually. The changes, revealed on Tuesday, aim to provide a more favorable tax environment for the salaried class by revising several key elements of the tax structure.
Key Changes in the New Tax Regime
One of the most significant alterations in the new tax regime is the increase in the standard deduction for salaried employees. The standard deduction has been raised to Rs 75,000, up from the previous Rs 50,000. This enhancement is expected to provide immediate tax relief by lowering the taxable income, thereby reducing the overall tax burden for employees.
In addition to this increase in the standard deduction, there have been adjustments to the income tax slabs. The new tax regime introduces a revised structure for income tax slabs, which will affect how salaried employees are taxed based on their income levels. Here’s a breakdown of the revised tax slabs for the fiscal year:
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Lowest Tax Slab Increase: The threshold for the lowest tax slab has been raised to Rs 3 lakh from Rs 2.5 lakh. This change effectively means that individuals earning up to Rs 3 lakh will not be subject to any income tax under the new regime, offering significant relief to those in the lower income bracket.
- Revised Tax Rates for Higher Income Brackets:
- 5% Tax Rate: Applicable to income ranging from Rs 3 lakh to Rs 7 lakh.
- 10% Tax Rate: Applied to income between Rs 7 lakh and Rs 10 lakh.
- 15% Tax Rate: For income falling within the Rs 10 lakh to Rs 12 lakh range.
- 20% Tax Rate: Imposed on income from Rs 12 lakh to Rs 15 lakh.
These adjustments aim to create a more equitable tax system by reducing the tax burden on lower and middle-income earners while maintaining progressive tax rates for higher income brackets.
Implications of the New Tax Regime
The changes proposed in the FY25 Budget are expected to bring about a tangible reduction in the tax liability for salaried employees. By increasing the standard deduction and adjusting the tax slabs, the new regime effectively lowers the taxable income for many individuals. This, in turn, results in a decrease in the amount of tax payable.
For instance, an employee earning Rs 5 lakh annually will benefit from the increased standard deduction and the revised tax slab rates. Under the previous regime, such an employee might have faced a higher tax rate, but with the new adjustments, they will experience a reduction in their overall tax outgo.
The new tax structure is designed to simplify the tax filing process and make it more transparent. By clearly defining the income slabs and corresponding tax rates, the new regime aims to reduce confusion and ensure that taxpayers can easily calculate their tax liabilities.
Staying Informed and Engaged
For those keen on understanding how these changes will affect their finances, it is crucial to stay updated with the latest developments. Comprehensive coverage of the Union Budget 2024 provides insights into the new income tax slab rates and their implications. Additionally, tracking the impact of the budget on various sectors, including the stock market, can offer a broader perspective on how the changes might influence the overall economic environment.
For real-time updates on the Union Budget 2024, including live streaming and detailed analyses, several platforms offer ongoing coverage. This ensures that taxpayers and financial professionals alike can access timely information and make informed decisions based on the latest budgetary announcements.