Finance Minister Nirmala Sitharaman increased the standard deduction by 50% to Rs 75,000 and adjusted tax slabs under the new income tax regime to put more money in the pockets of the salaried class and encourage spending.
Under the changes announced in the Budget, salaried employees in the new tax regime could save up to Rs 17,500 in income tax annually.
The proposal includes an annual increase in the standard deduction for salaried employees from Rs 50,000 to Rs 75,000. Additionally, the deduction on family pension for pensioners is proposed to be raised from Rs 15,000 to Rs 25,000.
"This will provide relief to about four crore salaried individuals and pensioners," Sitharaman said in her Budget speech.
More than two-thirds of individual taxpayers used the new personal income tax regime in the last fiscal year. Over 8.61 crore I-T returns were filed in the 2023-24 fiscal year.
The new tax slabs under the new income tax regime will be effective from April 1, 2024. (Assessment Year 2025-26).
Sitharaman said income of up to Rs 3 lakh will continue to be exempted from income tax under the new regime.
As per the proposal, a 5 per cent tax will be levied on income between Rs 3-7 lakh, 10 per cent between Rs 7-10 lakh, 15 per cent for Rs 10-12 lakh.
However, 20 per cent tax will continue to be levied on income between Rs 12-15 lakh and 30 per cent for income above Rs 15 lakh.
Under the existing new I-T regime, a 5 per cent tax is levied on income between Rs 3-6 lakh, 10 per cent for income between Rs 6-9 lakh.
Income between Rs 9-12 lakh and Rs 12-15 lakh is subject to 15 per cent and 20 per cent tax, respectively. A 30 per cent I-T would be applicable on income above Rs 15 lakh.
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