Union Budget 2024: FM Nirmala Sitharaman Proposes Change In Income Tax Slabs Rate

Finance Minister Nirmala Sitharaman proposed a revised tax regime in which she hiked the Standard Deduction to Rs 75,000 from Rs 50,000. She also assured that under this revised regime, salaried taxpayers would save Rs 17,500.

New Delhi: Finance Minister Nirmala Sitharaman tabled the Union Budget 2024-25 in Parliament on June 23. With her seventh consecutive budget as a Finance Minister, many were of the opinion that the Modi government would come up with some major tax reforms that would directly impact the middle class and salaried employees.

She proposed multiple changes for salaried taxpayers opting for the new tax regime. "The standard deduction for salaried employees is proposed to be increased from Rs 50,000 to Rs 75,000. Deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000," she said. Many had presumed that the FM would raise the Standard Deduction to Rs 1 lakh under the new tax regime.

Revised tax rate under New Tax Regime as follows:

1. Zero to Rs 3 Lakh: Nil
2. Rs 3 Lakh to Rs 7 Lakh: 5 per cent
3. Rs 7 Lakh to Rs 10 Lakh: 10 per cent
4. Rs 10 Lakh to Rs 12 Lakh: 15 per cent
5. Rs 12 Lakh to Rs 15 Lakh: 20 per cent
6. Above Rs 15 Lakh: 30 per cent
   

A salaried employee, under the new tax regime, will be thus able to save Rs 17,500 in income tax, the FM said. "As a result of these proposals, revenue of about ₹ 37,000 crore – ₹ 29,000 crore in direct taxes and ₹ 8,000 crore in indirect taxes – will be forgone while revenue of about ₹ 30,000 crore rupees will be additionally mobilized. Thus, the total revenue forgone is about ₹ 7,000 crore annually," she added.

"A comprehensive review of the customs duty structure over the next 6 months. TDS rate on e-commerce is set to be reduced to 0.1 per cent. I propose that two tax exemption regimes for charities merge into one and also to decriminalise TDS delay up to the filing of tax date," she added.

"Those earning Rs 12 lakh to Rs 15 lakh under the new tax regime would now be taxed at the rate of 20 per cent. Besides, the govt has proposed raising the long-term capital gains (LTCG) to 12.5 per cent from 10 per cent," she said.

To bolster the Indian start-up ecosystem, boost the entrepreneurial spirit and support innovation, the Finance Minister proposed to abolish the so-called angel tax for all classes of investors.

"This was a proposal from the industry for a long time, and this announcement will drive more investments towards startups in particular. Startups function as engines of economic growth, playing a crucial role in generating new jobs, ideas, products, and services," she said.

As per definition, angel tax refers to the income tax levied by the government on funding raised by unlisted companies, or startups, if their valuation exceeds the company's fair market value.