Income Tax Slab: Finance Minister Nirmala Sitharaman said in the budget speech that those who opt for the new tax regime will save Rs 17,500 due to changes in tax slabs and increase in standard deduction. How will this saving happen and how much will it be on how much income, understand the complete math.
Income Tax Slab: After the Lok Sabha elections, the middle class had a lot of expectations from the budget. There were many speculations that there could be a big relief on the personal tax i.e. income tax front. Relief was received, but less than expected. That too for those who will opt for the new tax regime. Finance Minister Nirmala Sitharaman allowed the tax rates or slabs to remain unchanged in the old tax regime in the budget presented on Tuesday. However, along with changing the income tax slabs in the new tax regime, the standard deduction for the salaried class was increased from Rs 50,000 to Rs 75,000. Due to this, those whose annual income is up to Rs 7.75 lakh will not have to pay any tax on choosing the new tax regime. Similarly, it has been proposed in the budget to increase the deduction on family pension for pensioners from Rs 15,000 to Rs 25,000.
The Finance Minister said in his budget speech that due to these changes, the salaried employee will have to pay up to Rs 17,500 less tax in income tax in the new tax regime. He also told that two-thirds of the income tax payers have now adopted the new tax regime, so most people will benefit from it. First of all, let us understand how those who opt for the new tax regime will save Rs 17500.
Who will get the benefit of Rs 17500
The Finance Minister said that those who adopt the new tax regime will have to pay Rs 17500 less tax on the same income in the financial year 2024-25 as compared to the previous financial year, but this will happen only in the situation when the taxable income is Rs 15 lakh or more. How much you will save if you have less income than this depends on which slab your income falls under.
Those whose income is more than 15 lakhs
As we have discussed above, in the new tax regime, the standard deduction has been increased from 50 thousand to 75 thousand rupees. In this way, those with taxable income of 15 lakhs or more will save tax of Rs 7500 on this 25 thousand at the rate of 30%. Apart from this, due to the change in slab and tax rate accordingly, this year 10 thousand rupees less tax will have to be paid as compared to the previous financial year and a total saving of Rs 17500 will be done.
If the income is between 12 lakhs and 15 lakhs
For those taxpayers whose taxable income is 12 lakhs or more, due to the change in tax slab, they will also have to pay 10 thousand rupees less tax, but there will be a saving of 20% on the increased standard deduction i.e. the amount of 25 thousand, which is 5 thousand rupees. In this way, people having income between 12 lakh and 15 lakh will have to pay 15 thousand rupees less tax due to these changes. You can understand how much benefit will be there on how much taxable income from the table given below.
| Savings from change in tax slab | |||
| FY 2023-24 | FY 2024-25 | ||
| Tax Slabs | Tax Amount | Tax Slabs | Tax Amount |
| 0 to 3 lakh rupees | 0 | 0 to 3 lakh rupees | 0 |
| Rs.3,00,001 to Rs.6 lakh (5%) | 15 thousand | Rs.3,00,001 to Rs.7 lakh (5%) | 20 thousand |
| Rs 6,00,001 to Rs 9 lakh (10%) | 30 thousand | Rs 7,00,001 to Rs 10 lakh (10%) | 30 thousand |
| Rs 9,00,001 to Rs 12 lakh (15%) | 45 thousand | Rs 10,00,001 to Rs 12 lakh (15%) | 30 thousand |
| Rs 12,00,001 to Rs 15 lakh (20%) | 60 thousand | Rs 2,00, 001 to Rs 15 lakh (20%) | 60 thousand |
| Total tax on income up to Rs 15 lakh | Rs 1,50,000 | Total tax on income up to Rs 15 lakh | Rs 1,40,000 |
Changes in tax slabs
The Finance Minister while presenting the budget said that in the new tax regime, as before, there will be no tax up to three lakh rupees, 5% on 3 to 7 lakh rupees, 10% on income of 7 to 10 lakhs, 15% on income of 10 to 12 lakhs, 20% on income of 12 to 15 lakhs and 30% tax on income above 15 lakhs.
No tax on income up to 7.75 lakhs
In the new tax regime, there is tax exemption on annual income up to 7 lakh rupees. After this, there was a standard deduction of 50 thousand rupees, so earlier there was no tax on income up to seven and a half lakh rupees. Now that the standard deduction has been made Rs 75,000 annually, those whose taxable income is up to Rs 7.75 lakhs will not have to pay any tax. However, it is important to note that if a person’s annual income is even one rupee more than Rs 7.75 lakh, he will have to pay 10% tax as per the changed tax slab.
