In her Union Budget 2024 speech, Finance Minister Nirmala Sitharaman unveiled significant changes to the income tax regime for the fiscal year 2024-25. Among the most notable updates is the hike in the standard deduction from Rs 50,000 to Rs 75,000, providing much-needed relief to taxpayers. Additionally, the tax slab for the 5% rate has been adjusted, increasing the threshold from Rs 6 lakh to Rs 7 lakh. The capital gains tax regime also saw a complete overhaul with increased tax rates. These modifications aim to incentivize the new income tax regime, while the old regime remains unchanged. Join us as we delve into the comprehensive details of the Income Tax Slabs for 2024-25 and explore the full impact of the Budget 2024 announcements on taxpayers across India.
In India, the Income Tax Slab system assigns varying tax rates to different income ranges, ensuring progressive taxation. As your income rises, so does the applicable tax rate, making it a fair system. These slabs are updated periodically, usually during the annual budget announcement. Different slabs cater to distinct taxpayer categories such as individuals below 60, senior citizens, and super senior citizens. This structure aims to balance the tax burden and promote equity among taxpayers. Understanding these slabs is crucial for effective financial planning and compliance.
The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, brings significant updates to the income tax structure under the new regime, aiming to provide relief and benefits to taxpayers across India.
These changes mean taxpayers could save up to Rs 17,500 annually, thanks to the updated slabs and increased standard deduction. This shift aims to simplify the tax process and provide more disposable income to individuals, thereby boosting the economy.
In summary, the Budget 2024 introduces a more taxpayer-friendly structure, aiming to provide substantial savings and benefits.
In the Budget 2024-25, the Indian government has introduced significant changes to the income tax slabs and standard deductions, impacting the choice between the old and new tax regimes. This update primarily benefits individuals with taxable incomes up to Rs 10 lakh.
Under the new tax regime, the Rs 6-7 lakh income portion is taxed at 5%, and the Rs 9-10 lakh portion is taxed at 10%, leading to a tax savings of Rs 5,000. Additionally, the standard deduction has increased to Rs 75,000, meaning that incomes up to Rs 7.75 lakh will not be taxed, providing a benefit of Rs 7,500 to salaried taxpayers.
For instance, if your taxable income is Rs 7.75 lakh and you only utilize the standard deduction, the old tax regime would result in a tax liability of around Rs 59,800. In contrast, under the new tax regime, you would owe no tax.
These changes make the new tax regime particularly advantageous for those with incomes up to Rs 7.75 lakh, simplifying tax calculations and reducing overall tax liability. As always, taxpayers should evaluate their individual circumstances to determine the most beneficial option.
Let’s a comparison of tax rates under the new tax regime and the old tax regime
Tax Slab for FY 2023-24 | Tax Rate | Tax Slab for FY 2024-25 | Tax Rate |
Upto ₹ 3 lakh | Nil | Upto ₹ 3 lakh | Nil |
₹ 3 lakh – ₹ 6 lakh | 5% | ₹ 3 lakh – ₹ 7 lakh | 5% |
₹ 6 lakh – ₹ 9 lakh | 10% | ₹ 7 lakh – ₹ 10 lakh | 10% |
₹ 9 lakh – ₹ 12 lakh | 15% | ₹ 10 lakh – ₹ 12 lakh | 15% |
₹ 12 lakh – ₹ 15 lakh | 20% | ₹ 12 lakh – ₹ 15 lakh | 20% |
More than 15 lakh | 30% | More than 15 lakh | 30% |
With the recent budget changes, understanding the break-even points between the old and new tax regimes has become crucial for Indian taxpayers. Previously, the new tax regime was less attractive, but now it’s essential to evaluate which option is more beneficial based on your income and eligible deductions.
For individuals earning between Rs. 8-10 lakh annually, opting for the old tax regime was advantageous if they could claim deductions ranging from Rs. 1,87,500 to Rs. 2,62,500. This meant that only if your eligible deductions met or exceeded this range would the old regime be more tax-efficient.
Similarly, for those with incomes between Rs. 12.5-15 lakh, the old tax regime became favourable if deductions fell between Rs. 3,12,500 and Rs. 3.75 lakh. These break-even points highlight the importance of calculating your deductions accurately to determine which tax regime maximizes your savings.
By carefully assessing your income and deductions, you can make an informed decision and optimize your tax liability.
The Union Budget 2024-25 introduced significant changes in tax regimes, prompting taxpayers to reassess their strategies. According to Parveen Kumar, Partner, Direct Tax at Dewan P N Chopra & Co, taxpayers with incomes between Rs 15 lakhs to Rs 5 crore might find both the old and new regimes comparable if they claim total deductions of Rs 4.08 lakhs. Exceeding this deduction amount favors the old regime, while those earning up to Rs 15 lakhs should carefully compare both regimes based on their specific circumstances.
For incomes under Rs 15 lakhs, the new tax regime generally proves advantageous due to more attractive slabs. Prior to the budget changes, an income of Rs 15 lakhs required deductions of Rs 3.75 lakhs for the old regime to be beneficial, a threshold that many might not meet. Thus, detailed comparisons become crucial only when income surpasses Rs 15 lakhs.
Chartered Accountant Mayur J Sondagar’s calculations reveal that the breakeven point for deductions under the old regime is Rs 4.08 lakhs. With deductions of Rs 4.50 lakhs, the old regime saves Rs 12,500, and at Rs 5 lakhs, it saves Rs 27,500.
For incomes above Rs 5 crore, the new regime is generally more favorable due to a substantial reduction in surcharge, resulting in a 12% lower tax rate.
The income tax slab rates under the old tax regime have remained unchanged for several years, providing stability for taxpayers opting for this method. This overview covers the income tax rates for the financial years (FY) 2024-25, 2023-24, 2022-23, and 2021-22, applicable for the corresponding assessment years (AY) 2025-26, 2024-25, 2023-24, and 2022-23.
The basic exemption limits under the old tax regime vary based on the age and residential status of the individual:
Since no changes were announced in the interim budget, the income tax rates for FY 2024-25 are identical to those for FY 2023-24:
The income tax rates for these years also follow the same structure:
Understanding these slab rates is crucial for accurate tax planning and compliance. Opting for the old tax regime may be advantageous for those who can avail themselves of various exemptions and deductions. As always, it’s advisable to consult with a tax professional to determine the best approach for your individual financial situation.
Income tax slabs for individuals under the old tax regime | |
Income tax slabs (Rs) | Income tax rates (%) |
From 0 to 2,50,000 | 0 |
From 2,50,001 to 5,00,000 | 5 |
From 5,00,001 to 10,00,000 | 20 |
From 10,00,001 and above | 30 |
Income tax slabs for senior citizens under the old tax regime | |
Income tax slabs (Rs) | Income tax rates (%) |
From 0 to 3,00,000 | 0 |
From 3,0,001 to 5,00,000 | 5 |
From 5,00,001 to 10,00,000 | 20 |
From 10,00,001 and above | 30 |
Income tax slabs for super senior citizens under old tax regime | |
Income tax slabs (Rs) | Income tax rates (%) |
From 0 to 5,00,000 | 0 |
From 5,00,001 to 10,00,000 | 20 |
From 10,00,001 and above | 30 |
Taxable Income | Old Tax Regime | New Tax Regime |
0 to Rs 2,50,000 | 0% | 0% |
Rs 2,50,001 to Rs 3,00,000 | 5% | 0% |
Rs 3,00,001 to Rs 5,00,000 | 5% | 5% |
Rs 5,00,001 to Rs 6,00,000 | 20% | 5% |
Rs 6,00,001 to Rs 9,00,000 | 20% | 10% |
Rs 9,00,001 to Rs 10,00,000 | 20% | 15% |
Rs10,00,001 to Rs12,00,000 | 30% | 15% |
Rs 12,00,001 to Rs 15,00,000 | 30% | 20% |
Rs15,00,001 and above | 30% | 30% |
To calculate the income tax payable under the new tax regime for the financial years 2023-24 and 2024-25, you need to follow these steps. Note that the income tax slabs and rates have remained unchanged for the upcoming financial year 2024-25. Here’s a detailed explanation using an example:
After applying these deductions, you arrive at the net taxable income.
Here is the calculation:
Particulars | Amount (In ₹) |
Gross total income | 20,00,000 |
Standard deduction from salary/pension | (50,000) |
Deduction under section 80CCD (2) | (1,50,000) |
Net taxable income | 18,00,000 |
After applying the standard deduction and the deduction under section 80CCD (2), the net taxable income on which the income tax payable is to be calculated is ₹18 lakh (₹20 lakh minus ₹2 lakh).
Step 1: Under the new income tax regime, income between 0 to ₹3 lakh is exempted from tax. Hence, no tax will be payable on this income. The remaining taxable income is ₹15 lakh (₹18 lakh minus ₹3 lakh).
Step 2: The next income tax slab is above ₹3 lakh and up to ₹6 lakh. Thus, out of the remaining ₹15 lakh, ₹3 lakh (falling in this slab) will be taxed at 5%. The tax payable here will be ₹15,000. The remaining taxable income is ₹12 lakh (₹15 lakh minus ₹3 lakh).
Step 3: The next income tax slab is above ₹6 lakh and up to ₹9 lakh. Thus, out of the remaining ₹12 lakh, ₹3 lakh (falling in this slab) will be taxed at 10%. The tax payable here will be ₹30,000. The remaining taxable income is ₹9 lakh (₹12 lakh minus ₹3 lakh).
Step 4: The next income tax slab is above ₹9 lakh and up to ₹12 lakh. Thus, out of the remaining ₹9 lakh, ₹3 lakh (falling in this slab) will be taxed at 15%. The tax payable here will be ₹45,000. The remaining taxable income is ₹6 lakh (₹9 lakh minus ₹3 lakh).
Step 5: The next income tax slab is above ₹12 lakh and up to ₹15 lakh. Thus, out of the remaining ₹6 lakh, ₹3 lakh (falling in this slab) will be taxed at 20%. The tax payable here will be ₹60,000. The remaining taxable income is ₹3 lakh (₹6 lakh minus ₹3 lakh).
Step 6: The last income tax slab is above ₹15 lakh. Thus, the balance taxable income of ₹3 lakh (falling in this slab) will be taxed at 30%. The tax payable here will be ₹90,000.
Total Income Tax Payable: ₹15,000+₹30,000+₹45,000+₹60,000+₹90,000=₹2,40,000₹15,000 + ₹30,000 + ₹45,000 + ₹60,000 + ₹90,000 = ₹2,40,000₹15,000+₹30,000+₹45,000+₹60,000+₹90,000=₹2,40,000
Therefore, the total income tax payable on a net taxable income of ₹18,00,000 under the new tax regime would be ₹2,40,000 for FY 2023-24 and FY 2024-25.
Particulars | Income (Rs) | Tax amount (Rs) |
Net taxable income | 18,00,000 | – |
Income exempt up to Rs 3 lakh | (3,00,000) | 0 |
Income which is still chargeable to tax (Rs 18 lakh – 3 lakh) | 15,00,000 | – |
Income tax slab of Rs 3 lakh and up to Rs 6 lakh | (3,00,000) | @ 5% = 15,000 |
Income which is still chargeable to tax (Rs 15 lakh – 3 lakh) | 12,00,000 | – |
Income tax slab of Rs 6 lakh up to Rs 9 lakh | (3,00,000) | @ 10% = 30,000 |
Income which is still chargeable to tax (Rs 12 lakh -3 lakh) | 9,00,000 | – |
Income tax slab of Rs 9 lakh up to Rs 12 lakh | (3,00,000) | @15% = 45,000 |
Income which is still chargeable to tax (Rs 9 lakh -3 lakh) | 6,00,000 | – |
Income tax slab of Rs 12 lakh up to Rs 15 lakh | (3,00,000) | @ 20% = 60,000 |
Income which is still chargeable to tax (Rs 6 lakh-3 lakh) | 3,00,000 | – |
Income tax slab of above Rs 15 lakh | (3,00,000) | @30% = 90000 |
Total income tax liability | – | 2,40,000 |
Cess at 4% on total income tax payable (i.e. on Rs 2,40,000) | – | 9,600 |
Final income tax liability (inclusive of cess) | – | 2,49,600 |
The total tax payable amount comes to ₹2,40,000. One must note that cess and surcharge amounts are yet to be added.
Cess is levied at the rate of 4% on the income tax payable. The surcharge is applicable if the income is above ₹50 lakh.
After adding cess of ₹9,600, the final tax amount is ₹2,49,600.
If you have decided to opt for the old tax regime for the current financial year 2023-24 or plan to opt for the same in the upcoming financial year 2024-25, it is important to know which income tax slab your income falls under. The slab rate applicable to your income will determine the tax rate at which the last rupee of your income will be taxed. It is important to note that the interim budget 2024 has kept income tax slabs under the old tax regime unchanged.
Under the old income tax regime, an individual taxpayer can claim various deductions and tax exemptions to bring down their gross total income. Once eligible tax exemptions and deductions are deducted from the gross total income, you will arrive at the net taxable income. It is on this income that an individual will calculate tax payable.
Here is an example of how to calculate income tax payable under the old tax regime:
Suppose an individual aged below 60 years has a gross total income of ₹17 lakh for the current financial year, i.e., FY 2023-24 (April 1, 2023-March 31, 2024). The individual has decided to opt for the old tax regime for the current financial year. Further, he/she is eligible to claim the following tax exemptions and deductions: section 80C for up to ₹1.5 lakh, section 80CCD(1b) for NPS investment of ₹50,000, section 80D of ₹25,000 for medical insurance premium paid, and section 80TTA of ₹10,000 on savings account interest earned.
Particulars | Amount (in ₹) |
Gross total income | 17,00,000 |
Section 80C | (1,50,000) |
Section 80CCD(1b) NPS investment | (50,000) |
Section 80D – medical insurance premium | (25,000) |
Section 80TTA | (10,000) |
Net taxable income | 14,65,000 |
Step 1: Income up to ₹2,50,000 is exempt from tax. The remaining taxable income is ₹12,15,000 (₹14,65,000 minus ₹2,50,000).
Step 2: The next income tax slab is above ₹2,50,000 and up to ₹5,00,000. Thus, out of the remaining ₹12,15,000, ₹2,50,000 (falling in this slab) will be taxed at 5%. The tax payable here will be ₹12,500. The remaining taxable income is ₹9,65,000 (₹12,15,000 minus ₹2,50,000).
Step 3: The next income tax slab is above ₹5,00,000 and up to ₹10,00,000. Thus, out of the remaining ₹9,65,000, ₹5,00,000 (falling in this slab) will be taxed at 20%. The tax payable here will be ₹1,00,000. The remaining taxable income is ₹4,65,000 (₹9,65,000 minus ₹5,00,000).
Step 4: The last income tax slab is above ₹10,00,000. Thus, the balance taxable income of ₹4,65,000 (falling in this slab) will be taxed at 30%. The tax payable here will be ₹1,39,500.
Total Income Tax Payable: ₹12,500+₹1,00,000+₹1,39,500=₹2,52,000₹12,500 + ₹1,00,000 + ₹1,39,500 = ₹2,52,000₹12,500+₹1,00,000+₹1,39,500=₹2,52,000
Therefore, the total income tax payable on a net taxable income of ₹14,65,000 under the old tax regime would be ₹2,52,000 for FY 2023-24 and FY 2024-25.
Calculation of income tax payable for taxable income of Rs 14.65 lakh | ||
Particulars | Income (Rs) | Tax amount (Rs) |
Net taxable income | 14,65,000 | – |
Income exempt up to Rs 2,50,000 | (2,50,000) | 0 |
Income which is still chargeable to tax (Rs 14,65,000 – 2,50,000) | 12,15,000 | – |
Income tax slab of Rs 2.5 lakh and up to Rs 5 lakh | (2,50,000) | @ 5% =12,500 |
Income which is still chargeable to tax (Rs 12,15,000 – 2,50,000) | 9,65,000 | – |
Income tax slab of Rs 5 lakh up to Rs 10 lakh | (5,00,000) | @20% = 1,00,000 |
Income which is still chargeable to tax (Rs 9,65,000 – 5,00,000) | 4,65,000 | – |
Income tax slab of above Rs 10 lakh | (4,65,000) | @ 30% =1,39,500 |
Total income tax liability | – | 2,52,000 |
Cess at 4% on total income tax payable (i.e. on Rs 2,52,000) | – | 10,080 |
Final income tax liability (inclusive of cess) | – | 2,62,080 |
Do note that cess and surcharge are also levied on the income tax payable. Cess is levied at the rate of 4%, and surcharge is levied if the total income exceeds ₹50 lakh.
From the example above, the cess amount is ₹10,080. The surcharge will not be applicable as the net taxable income does not exceed ₹50 lakh. The final tax amount payable by the individual is ₹2,62,080.
To calculate the income tax payable in a particular financial year, it is crucial to know the tax slabs your income falls under. This also depends on the income tax regime chosen by you for that financial year. An individual should compare the income tax payable under both tax regimes before making a choice.
To determine the income tax slabs and rates applicable to your income, you must first calculate the taxable income on which tax has to be assessed. If you continue with the old, existing income tax regime, you are eligible to claim tax exemptions (such as House Rent Allowance exemption, Leave Travel Allowance exemption, standard deduction) and deductions under sections 80C to 80U, as applicable. After claiming and deducting the tax exemptions and deductions, you arrive at the taxable income on which the income tax payable is calculated.
For example, if your total income from all sources is ₹12 lakh and you are eligible to claim deductions of ₹2.10 lakh under sections 80C, 80TTA, and 80CCD(1b), the taxable income on which you need to calculate tax will be ₹9.9 lakh (₹12 lakh minus ₹2.10 lakh). Your income tax slab in the old tax regime will be between ₹5 lakh and ₹10 lakh, and the tax rate will be 20%.
However, if you opt for the new, concessional tax regime, you cannot claim the tax exemptions and deductions mentioned above. The new tax regime allows two deductions: Standard deduction of ₹50,000 from salary and pension income, and Section 80CCD (2) for the employer’s contribution to the employee’s Tier-I NPS account. From the example above, after claiming these deductions, the taxable income is ₹10 lakh (Gross taxable income of ₹12 lakh minus ₹2 lakh). The net taxable income of ₹10 lakh falls under the income tax slab of ₹9,00,001 to ₹12,00,000 and will be taxed at 15%.
If an individual’s net taxable income exceeds a specified level, then a surcharge is levied. The surcharge is applied to the income tax payable amount before the levy of cess. According to income tax laws, a surcharge is applicable if an individual’s taxable income exceeds ₹50 lakh.
From FY 2023-24, the government made changes in the surcharge rates under the new tax regime. The new surcharge rates have come into effect from April 1, 2023. It is important to note that no changes were announced in the interim budget 2024. The income tax slabs, income tax rates, and surcharge rates have been kept unchanged for FY 2024-25.
Income range | Surcharge rate |
Up to ₹50 lakh | Nil |
More than ₹50 lakh but up to ₹1 crore | 10% |
More than ₹1 crore but up to ₹2 crore | 15% |
More than ₹2 crore | 25% |
However, individuals opting for the old tax regime in FY 2023-24 will continue to pay the surcharge rate they were paying in the previous financial years.
Surcharge rate under old tax regime | |
Income range | Surcharge rate |
Upto Rs 50 lakh | Nil |
More than Rs 50 lakh but up to Rs 1 crore | 10% |
More than Rs 1 crore but up to Rs 2 crore | 15% |
More than Rs 2 crore but up to Rs 5 crore | 25% |
More than Rs 5 crore | 37% |
The deduction under Section 80CCD(2) is set to be raised from 10% to 14% of the basic salary. This section permits you to contribute up to 10% of your basic pay to NPS tax-free. Previously, only government employees were eligible for the 14% deduction, but now this benefit has been extended to the private sector as well.
At present, a salaried employee may declare income, such as bank interest and rent, to their employer, who factors this in and, accordingly, deducts a higher tax against the monthly salary. The employee then does not have to worry about paying advance tax as adequate tax has already been withheld.
A similar norm comes into effect from October 1. The salaried employee will be able to declare TCS, and the employer will factor this in, resulting in a lower TDS against salary income. This will help avoid cash-flow issues. Furthermore, if a refund was due owing to TCS, the individual taxpayer will no longer have to wait for it as it is adjusted against TDS on salary income.
Which income tax regime should you choose after Budget 2024 – the old regime or the revised new tax regime? If you are already filing returns under the existing new regime, how much benefit will you get from the revised version? Finance Minister Nirmala Sitharaman announced that the standard deduction hike and new income tax slabs under the revised new regime will save salaried taxpayers ₹17,500. To understand your potential savings at different salary levels, we examine 10 tables from EY detailing the new income tax changes and their impact on taxpayers at various income levels.
LTCG Changes Alert! The rate of long-term capital gains under provisions of various sections of the Act is proposed to be 12.5% for all categories of assets. Previously, this rate was 10% for STT-paid listed equity shares, units of equity-oriented funds, and business trusts under section 112A. For other assets, it was 20% with indexation under section 112.
An exemption of gains up to ₹1.25 lakh (aggregate) is proposed for long-term capital gains under section 112A on STT-paid equity shares, units of equity-oriented funds, and business trusts. This increases the previously available exemption, which was up to ₹1 lakh of income from long-term capital gains on such assets.
For bonds and debentures, the rate for taxation of long-term capital gains was 20% without indexation. For listed bonds and debentures, the rate shall be reduced to 12.5%. Unlisted debentures and unlisted bonds are considered debt instruments, and therefore, any capital gains on them should be taxed at the applicable rate, whether short-term or long-term. This is proposed accordingly.
The rate for short-term capital gains under provisions of section 111A of the Act on STT paid equity shares, units of equity-oriented mutual funds, and units of a business trust is proposed to be increased to 20% from the present rate of 15%. This change is being made as the current rate is considered too low, and the benefit from such a low rate is largely flowing to high net worth individuals. Other short-term capital gains shall continue to be taxed at the applicable rate.
Increase in Standard Deduction and Deduction from Family Pension for Taxpayers in Tax Regime
The existing provision of clause (ia) of section 16 of the Act provides that a deduction of fifty thousand rupees or the amount of the salary, whichever is less, shall be made before computing the income under the head “Salaries.”
Further, the existing provision of clause (iia) of section 57 of the Act provides that in the case of income in the nature of family pension, a deduction of a sum equal to thirty-three and one-third per cent of such income or fifteen thousand rupees, whichever is less, shall be made before computing the income chargeable under the head "Income from Other Sources."
With the aim of encouraging and incentivizing taxpayers (especially salaried taxpayers) to shift to the new tax regime, it is proposed to insert a proviso after clause (ia) of section 16 to provide that in a case where income tax is computed under clause (ii) of sub-section (1A) of section 115BAC of the Act, the provisions of this clause shall have effect as if for the words “fifty thousand rupees”, the words “seventy-five thousand rupees” had been substituted.
It is also proposed to insert a proviso in clause (iia) of section 57 to provide that in a case where income tax is computed under clause (ii) of sub-section (1A) of section 115BAC of the Act, the provisions of this clause shall have effect as if for the words “fifteen thousand rupees”, the words “twenty-five thousand rupees” had been substituted.
These amendments will take effect from the 1st day of April, 2025, and will accordingly apply to the assessment year 2025-26 and subsequent assessment years.
Section 36 of the Income Tax Act pertains to other deductions allowed while computing the income under the head ‘Profits and Gains of Business or Profession’. Clause (iva) of sub-section (1) of this section states that any sum paid by the assessee as an employer by way of contribution towards a pension scheme, as referred to in section 80CCD of the Act, on account of an employee, to the extent it does not exceed 10% of the salary of the employee in the previous year, shall be allowed as a deduction to the employer.
It is proposed to amend clause (iva) of sub-section (1) of section 36 of the Act, to increase the amount of employer contribution allowed as a deduction to the employer, from the extent of 10% to the extent of 14% of the salary of the employee in the previous year.
Section 80CCD deals with deductions in respect of contributions to the pension scheme of the Central Government. Sub-section (2) of section 80CCD states that any contribution by the Central Government or State Government or any other employer to the account of an employee referred to in sub-section (1), shall be allowed as a deduction as does not exceed ––
(a) 14% (where such contribution is made by the Central Government or State Government); and
(b) 10% (where such contribution is made by any other employer) of the employee’s salary in the previous year.
It is proposed to amend sub-section (2) of section 80CCD of the Act, to provide that where such contribution has been made by any other employer (not being the Central Government or State Government), the employee shall be allowed as a deduction an amount not exceeding 14% of the employee’s salary. This increase applies only where the employee’s salary is chargeable to tax under sub-section (1A) of section 115BAC of the Act.
The amendments will take effect from April 1, 2025, and will accordingly apply from the assessment year 2025-2026 onwards.
Income Tax Budget 2024: 'Tax changes will benefit a large number of taxpayers'
"The Union Budget 2024 brings substantial changes to personal finance that will benefit a large number of taxpayers. The increase in the standard deduction from ₹50,000 to ₹75,000 and the revision of the tax slab limit for the 5% tax rate from ₹5 lakh to ₹7 lakh will significantly enhance disposable income. These changes will provide much-needed financial relief to the middle class and boost overall consumption.
Furthermore, the proposal to increase the deduction of employer expenditure towards NPS from 10% to 14% of the employee’s salary will improve social security benefits for the workforce. The revamp of the capital gains tax regime will impact investment decisions and financial planning, ensuring a more balanced and fair approach to taxation. These measures collectively contribute to a more robust and financially secure environment for individuals and families across India," says Rohan Bhargava, Co-Founder of CashKaro.
“With the marginal increase in LTCG from 10% to 12.5%, long-term investors might be paying slightly higher taxes. However, with the exemption limit raised to ₹1.25 lakh, small investors will see modest benefits. The increase of STCG from 15% to 20% will impact short-term equity investors. Although the tax rates are marginally increased, equity mutual funds remain an attractive investment opportunity compared to other asset classes. Therefore, we do not anticipate that the change in tax rates will significantly affect the flows towards equity mutual funds.
The withdrawal of the 20% TDS rate on mutual fund unit repurchase marks a step towards easing the tax burden for investors.
This aligns with the overall budget's focus on inclusive growth, employment generation, and infrastructure development, aimed at creating ample opportunities and fostering a resilient economy,” says Feroze Azeez, Deputy CEO Anand Rathi Wealth Limited.
Finance Minister Nirmala Sitharaman did not announce any changes to the old income tax regime. This aligns with what most personal tax experts were expecting, given that last year the new tax regime was made the default tax regime. The Modi government has signaled a clear intent to move towards a tax regime with fewer or negligible exemptions. Interestingly, in a pre-Budget 2024 survey conducted by Times of India Online, most tax experts were of the view that the government will eventually phase out the old income tax regime.
At various income levels, the benefits will vary. The base income tax benefit of ₹17,500 announced by FM Sitharaman does not include the cess. It also doesn't include surcharge at higher income levels. As per the analysis by EY, you will now have to pay zero tax on income up to ₹7.75 lakh. For income up to ₹10 lakh, you will annually save ₹10,000 (without cess). If one were to include cess, then the benefit will go up.
It is proposed that the income from the buy-back of shares by companies be chargeable in the hands of the recipient investor as a dividend, instead of the current regime of additional income tax in the hands of the company. Further, the cost of such shares shall be treated as a capital loss to the investor.
It is proposed to increase the rates of STT on the sale of an option in securities from 0.0625% to 0.1% of the option premium and on the sale of futures in securities from 0.0125% to 0.02% of the price at which such futures are traded.
It is proposed that income from letting out a house or part of a house by the owner shall not be charged under the head 'profits and gains of business or profession' and will be chargeable to tax under the head 'income from house property' only.
It is proposed to provide that the transfer of a capital asset, under a gift or will or an irrevocable trust, by an entity other than an individual or a Hindu undivided family (HUF) only, shall be regarded as a transfer for the purpose of calculating capital gains.
It is proposed that payments made by a firm to its partner in the nature of salary, remuneration, commission, bonus, and interest, etc., shall be subject to TDS at the rate of 10% for aggregate amounts more than ₹20,000 in a financial year.
To enable TCS on luxury goods, it is proposed to levy TCS of 1% on notified goods of value exceeding ₹10 lakh.
It is proposed to clarify that where there is more than one transferor or transferee concerning an immovable property, then such consideration for the transfer of the immovable property shall be the aggregate of the amounts paid or payable by all the transferees to the transferor or all the transferors for the transfer of such immovable property.
TDS is proposed on interest exceeding ₹10,000 on Floating Rate Savings (Taxable) Bonds (FRSB) 2020 or any other notified security of the Central or State Governments.
It is proposed to provide that any expenditure which is not admissible under the provisions of section 37 in computing the profits and gains of a business shall be included in the profits and gains of the life insurance business.
It is proposed to provide that income tax paid outside India by way of deduction is deemed to be income received for the purpose of computing the income of the assessee.
It is proposed to explicitly state that any sum referred to in sub-section (1) of section 194J (fees for professional or technical services) does not constitute “work” for the purposes of TDS under section 194C (payments to contractors).
It is proposed to disallow expenses incurred as settlement fees for any contravention of law, as may be notified by the Central Government.
It is proposed to provide for a method of calculation of fair market value on 31.01.18 under section 55(2)(ac) in the case of the sale of unlisted equity shares in an offer for sale in an initial public offer.
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