The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, brings a range of changes to the tax regime, particularly aimed at benefiting salaried individuals. With updates to the standard deduction, income tax slabs, and other deductions, this budget is set to provide substantial relief to middle-class taxpayers. Here’s a detailed look at the five major changes in tax rules for salaried employees.
1. Increase in Standard Deduction
The standard deduction for salaried individuals has been increased from Rs 50,000 to Rs 75,000. This increase of Rs 25,000 is a significant relief for employees, directly reducing their taxable income and saving them Rs 17,500 annually. This change aims to make the new tax regime more attractive and beneficial for salaried taxpayers.
2. Revamped Income Tax Slabs
The Finance Minister announced a revamp of the income tax slabs under the new regime. The updated slabs are designed to provide better savings and simplify the tax structure. The new slabs are as follows:
- Income up to Rs 3 lakh: 0%
- Rs 3 lakh to Rs 7 lakh: 5%
- Rs 7 lakh to Rs 10 lakh: 10%
- Rs 10 lakh to Rs 12 lakh: 15%
- Rs 12 lakh to Rs 15 lakh: 20%
- Income above Rs 15 lakh: 30%
3. Changes in Three Slab Categories
The revised income tax slabs have specifically adjusted three categories:
- The 5% tax rate now applies to income from Rs 3 lakh to Rs 7 lakh (previously Rs 3 lakh to Rs 6 lakh).
- The 10% tax rate now applies to income from Rs 7 lakh to Rs 10 lakh (previously Rs 6 lakh to Rs 9 lakh).
- The 15% tax rate now applies to income from Rs 10 lakh to Rs 12 lakh (previously Rs 9 lakh to Rs 12 lakh).
These adjustments provide a more streamlined and beneficial tax structure for salaried employees.
4. Higher Deduction Limits for NPS Contributions
The government has increased the deduction limit for employers’ contributions to the National Pension System (NPS) from 10% to 14% of the salary. This change encourages higher savings for retirement and provides additional tax benefits to employees, making the NPS a more attractive retirement savings option.
5. Increased Deductions for Family Pensions
The deduction for family pensions has been proposed to increase from Rs 15,000 to Rs 25,000. This change will benefit around 4 crore salaried individuals and pensioners, providing them with additional financial relief and support.
Conclusion
The Union Budget 2024 introduces significant changes aimed at providing relief to salaried employees and simplifying the tax structure. With an increased standard deduction, revamped tax slabs, higher NPS contribution limits, and increased family pension deductions, this budget offers substantial benefits to middle-class taxpayers. These changes reflect the government’s commitment to supporting salaried individuals and promoting economic growth.
