Budget 2024: New tax regime to help salaried employees save up to Rs...

Union Finance Minister Nirmala Sitharaman revised income tax slabs under the New Tax Regime while announcing the Union Budget 2024. It offers considerable savings in the hands of salaried taxpayers. She said that the revised tax slabs would save salaried individuals Rs 17,500 annually under the new regime. The Finance Minister also announced the hike in the standard deduction limit from Rs 50,000 to Rs 75,000, marking an increase of Rs 25,000.

After the revision of income tax slabs, there is no tax liability for income up to Rs 3 lakh. The income bracket up to Rs 7 lakh will now attract a 5 per cent tax rate. 10 percent tax liability will be levied on income up to Rs 10 lakh instead of only Rs 9 lakh earlier. Tax rates for other income brackets continue to remain the same. Collectively, these changes can enable a salaried taxpayer (in the 30 percent tax bracket) to save up to Rs 17,500 in total tax outgo under the new tax regime.

How this Rs 17,500 is calculated

1. For Rs 3-6 lakh income, tax liability is Rs 15,000 as per current rates. It is 20,000 as per the latest changes. There is an additional tax of Rs 5,000 which is -5,000.

2. For income of  Rs 9-12 lakh, tax liability is 15 per cent as per the current rates, which becomes Rs 45,000. Under new slabs, tax liability for income between Rs 10-12 lakh is 15 per cent, thus bringing the tax amount to Rs 30,000. The total saving here is Rs 15,000 (45,000 - 30,000).

3. When you factor in both I and II, the total saving is Rs 10,000 (15,000 -5,000).

4. There is an additional standard deduction of Rs 25,000 for someone with 30% tax bracket. Hence, the total saving of Rs 7,500 (30% of 25,000).

Therefore, when you add 3 and 4, the total savings become Rs 17,500.