Latest Income Tax Slab and Tax Rate: Finance Minister Nirmala Sitharaman did not give any relief to those who chose the old tax regime in the Union Budget. However, the salaried class has got some relief due to the change in slabs in the new tax regime and the increase of 25 thousand in standard deduction.
Income Tax Slab and Tax Rate: Finance Minister Nirmala Sitharaman did not give any major relief on the income tax front as expected in her seventh budget, but arranged for minor concessions for those who choose the new tax regime. In the new tax regime, a proposal was made in the budget to increase the standard deduction by 50 percent to Rs 75,000 and change the tax slab. Similarly, there is also a proposal to increase the deduction on family pension for pensioners from Rs 15,000 to Rs 25,000. Nirmala Sitharaman said that more than two-thirds of the personal taxpayers have opted for the new tax in the financial year 2023-24. More than 8.61 crore income tax returns were filed in the last financial year. The new slabs announced in the budget today will be effective from April 1, 2024 (assessment year 2025-26).
In his budget speech, the Finance Minister claimed that the changes made in the income tax slabs in the new tax regime and the increase in standard deduction from 50 thousand to 75 thousand will save taxpayers about Rs 17,500 and the government will lose revenue of 7 thousand crores. He said that this will benefit four crore salary earners and pensioners. Those who go with the old tax regime do not seem to get any benefit.
New Tax Regime: New Slabs
| Income Tax Slab | Income Tax Rate |
| Upto Rs.3,00,000 | Zero |
| Rs.3,00,001 – Rs.7,00,000 | 5% |
| Rs.7,00,001 – Rs.10,00,000 | 10% |
| Rs.10,00,001 – Rs.12,00,000 | 15 % |
| Rs. 12,00,001 – 15,00,000 | 20% |
| Above Rs.15 Lakh | 30% |
The Finance Minister said that in the new tax regime, the standard deduction for the salaried class is being increased from Rs 50,000 to Rs 75,000. Apart from this, like before, there will be no tax up to Rs 3 lakh, 5 percent on Rs 3 to 7 lakh, 10 percent on income of Rs 7 to 10 lakh, 15 percent on income of Rs 10 to 12 lakh, 20% on income of Rs 12 to 15 lakh and 30 percent tax will have to be paid on income more than Rs 15 lakh. Apart from this, the limit of deduction in family pension has been increased from Rs 15,000 to Rs 25,000.
Nothing has changed in the old tax regime
There has been no change in the old tax regime. The old slabs and old rates will remain the same. In the old tax regime, there is no tax on income up to Rs 2.5 lakh. After this, income from Rs 2.5 lakh to Rs 5 lakh is taxed at 5%, income above Rs 5 lakh and up to Rs 10 lakh is taxed at 20% and income above Rs 10 lakh is taxed at 30%. However, many tax saving instruments are exempted in the old tax regime.
| Income Tax Rate | new tax rate | old tax rate |
| Upto Rs.2,50,000 | Zero | |
| Rs.2,50,001 – Rs.5,00,000 | 5 % | |
| Rs.5,00,001 – Rs.10,00,000 | 20% | |
| Above Rs.10 Lakh | 30 |
What changed in NPS?
It is proposed to increase the contribution made by the employer in the New Pension Scheme (NPS) from 10 percent to 14 percent of the employee’s salary. Similarly, it is proposed to make a provision for deduction of expenditure up to 14% of the salary from the income of employees opting for the new tax regime in the private sector, public sector banks and PSUs. The Finance Minister said that the Income Tax Act, 1961 will be comprehensively reviewed. It is proposed to merge two tax exemption systems for charitable institutions into one. Similarly, the rate of TDS of five percent on multiple payments is being reduced to two percent TDS rate. “In the budget, it is proposed to reduce the TDS rate on e-commerce operators from 1 percent to 0.1 percent. Along with this, it is proposed to give benefit of the amount of TCS in the calculation of TDS deducted on salary.
