As the financial year 2024-25 unfolds, the latest Union Budget has introduced significant changes to the personal tax slabs under the new tax regime. These modifications are aimed at providing relief to taxpayers, particularly the middle class, and simplifying the overall tax structure. Here’s an in-depth look at the new tax regime 2024-25 and key benefits that taxpayers can leverage.
Goodbye Complexities, Hello Savings!
The new tax regime aims to simplify tax filing by offering fewer deductions and exemptions in exchange for lower tax rates. Here’s a breakdown of the revised tax slabs for the financial year 2024-25:
New Tax Regime: Detailed Tax Slabs
- Income up to ₹3,00,000: No tax
- Income from ₹3,00,001 to ₹6,00,000: 5%
- Income from ₹6,00,001 to ₹9,00,000: 10%
- Income from ₹9,00,001 to ₹12,00,000: 15%
- Income from ₹12,00,001 to ₹15,00,000: 20%
- Income above ₹15,00,000: 30%
Income tax slabs 2024 25
| Income Range | Tax Rate | Surcharge | Key Benefits | Details |
|---|---|---|---|---|
| Up to ₹3,00,000 | No tax | N/A | N/A | No tax for income up to ₹3,00,000 |
| ₹3,00,001 to ₹6,00,000 | 5% | N/A | Rebate Increase | Rebate limit increased to ₹7,00,000 |
| ₹6,00,001 to ₹9,00,000 | 10% | N/A | Standard Deduction | Standard deduction of ₹50,000 applicable |
| ₹9,00,001 to ₹12,00,000 | 15% | N/A | Leave Encashment | Leave encashment exemption limit increased to ₹25,00,000 |
| ₹12,00,001 to ₹15,00,000 | 20% | N/A | Surcharge Reduction | Highest surcharge rate reduced from 37% to 25% |
| Above ₹15,00,000 | 30% | N/A | Surcharge Reduction | Maximum tax rate reduced from 42.74% to 39% |
Key Changes and Benefits in the New Tax Regime
- Rebate Increase:
- The rebate limit for individuals under the new tax regime has been increased to ₹7,00,000. This effectively means that individuals earning up to ₹7,00,000 will not have to pay any tax.
- Standard Deduction:
- A standard deduction of ₹50,000 for salaried individuals and pensioners is now applicable under the new tax regime, providing additional relief and reducing the taxable income.
- Leave Encashment:
- The tax exemption limit for leave encashment on retirement for non-government salaried employees has been significantly increased from ₹3,00,000 to ₹25,00,000. This change is particularly beneficial for long-serving employees looking to maximize their retirement benefits.
- Surcharge Reduction:
- The highest surcharge rate has been reduced from 37% to 25% in the new tax regime, lowering the maximum tax rate from 42.74% to 39%. This reduction aims to alleviate the tax burden on high-income earners.
Also read: Union Budget 2024-25 Telangana: Key Allocations & Strategic Investments for Telangana’s Future
Surcharge Details:
- Income above ₹50 lakh up to ₹1 crore: 10%
- Income above ₹1 crore up to ₹2 crore: 15%
- Income above ₹2 crore up to ₹5 crore: 25%
- Income above ₹5 crore: 25% (previously 37%, now reduced)
Surcharge Details:
| Income Range | Surcharge |
|---|---|
| Above ₹50 lakh up to ₹1 crore | 10% |
| Above ₹1 crore up to ₹2 crore | 15% |
| Above ₹2 crore up to ₹5 crore | 25% (reduced from 37%) |
| Above ₹5 crore | 25% (reduced from 37%) |
Conclusion
The changes in the personal tax slabs and the introduction of new benefits are designed to simplify the tax process and provide substantial relief to a broad range of taxpayers. The increased rebate limit, standard deduction, higher leave encashment exemption, and reduced surcharge rates collectively contribute to a more favorable tax environment.
By incorporating these new tax changes effectively, individuals can ensure they make the most of the available benefits and optimize their tax liabilities for the financial year 2024-25.
Frequently Asked Questions:
A1: The rebate limit has been increased to ₹7,00,000. This means individuals earning up to ₹7,00,000 will not have to pay any tax.
A2: Yes, a standard deduction of ₹50,000 for salaried individuals and pensioners is now applicable under the new tax regime.
A3: The highest surcharge rate has been reduced from 37% to 25%, lowering the maximum tax rate from 42.74% to 39%.
A4: These changes aim to simplify the tax process and provide substantial relief to taxpayers, particularly the middle class. They collectively contribute to a more favorable tax environment.
A5: High-income earners will benefit from the reduced surcharge as it lowers their overall tax liability. The highest surcharge rate has been reduced from 37% to 25%, which decreases the maximum effective tax rate from 42.74% to 39%.
Suggested Articles:
Union Budget 2024-25: Key Allocations for Andhra Pradesh
Union Budget 2024-25 Telangana: Key Allocations & Strategic Investments for Telangana’s Future
