Budget 2024: Finance Minister gives relief to salaried class on tax slabs and standard deduction

Finance Minister Nirmala Sitharaman has announced a significant series of income tax reforms for FY 2024-25, aimed at simplifying tax laws, promoting compliance and boosting economic growth.

The Finance Minister highlighted the strong adoption of the simplified corporate tax regime, which now accounts for 58 per cent of corporate tax revenues in 2022-23.

And two-thirds of individual tax filers are opting for the new tax regime. The government is working on a comprehensive review of the Income Tax Act, which will be completed in the next six months.

The Finance Minister has given some relief to taxpayers by increasing the tax slab for personal income tax. In the new tax slab, like last year, there will be no tax on income up to Rs 3 lakh.

But now, income between Rs 3-7 lakh will be taxed at the rate of 5 per cent, while earlier, income between Rs 3-6 lakh was taxed at 5 per cent.

Now 10 percent tax will be levied on income of Rs 7-10 lakh, earlier this rate was on income between Rs 6-9 lakh.

Now 15 percent tax will be levied on income of Rs 10-12 lakh, earlier this tax was on income of Rs 9-12 lakh.

Tax on income up to Rs 12-15 lakh will remain stable at 20 percent and tax on income above Rs 15 lakh will remain stable at 30 percent.

The Finance Minister has also given relief on standard deduction which has been increased from the present Rs 50,000 to Rs 75,000. The deduction of Rs 15,000 from family pension has been increased to Rs 25,000 under the new tax regime.

The Finance Minister also announced increasing the amount of deduction in respect of employer’s contribution to pension scheme under Section 80CCD from 10 per cent to 14 per cent of the employee’s salary.

This means that in the new tax regime, a non-government employee will now be allowed a deduction of up to 14 per cent of his/her salary instead of 10 per cent.

Additional measures announced to reduce the tax burden on individuals and businesses include merging the existing tax exemption regime for charitable institutions, reducing the TDS rate for e-commerce operators to 0.1 per cent from the earlier 1 per cent, and allowing TCS credit against TDS deducted on salaries.

To streamline tax administration and reduce litigation, the Finance Minister has announced simplification of reopening and reassessment processes. Standard operating procedures (SOPs) for TDS defaults have been rationalised and compounding guidelines have been issued.

A simplified tax regime has been introduced for foreign shipping companies operating domestic cruises in the country. Income from buyback will now be taxed and the penalty for not disclosing movable assets worth Rs 20 lakh is being removed.

Apart from this, equalisation fee, a tax levied on digital transactions, has also been removed.