Slight changes to income tax rates in Budget 2024-25: All you need to know
In the 2024-25 Union Budget, Finance Minister Nirmala Sitharaman announced the standard deduction for salaried employees was increased from Rs 50,000 to Rs 75,000, and the deduction on family pensions was enhanced from Rs 15,000 to Rs 25,000. “These changes aim to benefit approximately 4 crore salaried individuals and pensioners,” said the Finance Minister.
The Union government also decided to go with only minor changes to the prevailing income tax rates and slabs in two categories and left most of it untouched. The revised tax slabs under the new regime are as follows: 0% tax for income between Rs 0 and 3 lakh, 5% for income between Rs 3 and 7 lakh, 10% for income between Rs 7 and 10 lakh, 15% for income between Rs 10 and 12 lakh, 20% for income between Rs 12 and 15 lakh, and 30% for income above Rs 15 lakh.
The Union government abolished the angel tax for all classes of investors and also announced the implementation of the Vivad se Vishwas scheme to resolve tax disputes. At present, angel investments in India are taxed at a whopping 30.9% and it has been a long-standing demand of the industry and venture capitalists to remove this tax.
Additionally, the government has digitalised all major taxpayer services, enhancing efficiency and accessibility. The finance minister noted that more than two-thirds of taxpayers availed themselves of the new income tax regime in FY24.
In the 2023-24 Union Budget, the rebate limit was increased for those with incomes up to Rs 7 lakh under the new tax regime, up from the existing limit of Rs 5 lakh. This means individuals earning less than Rs 7 lakh annually didn’t have to pay any income tax.
For those earning above Rs 7 lakh, the new tax regime introduced the following tax rates: 0% for income between Rs 0 and 3 lakh, 5% for income between Rs 3 and 6 lakh, 10% for income between Rs 6 and 9 lakh, 15% for income between Rs 9 and 12 lakh, 20% for income between Rs 12 and 15 lakh, and 30% for income above Rs 15 lakh. The new income tax regime was made the default option, while citizens still had the choice to opt for the old tax regime.
Under the old regime, income up to Rs 5 lakh was taxed at 0%, income between Rs 5 and 7.5 lakh was taxed at 15%, income between Rs 7.5 and 10 lakh was taxed at 20%, and income above Rs 10 lakh was taxed at 30%.