Union Finance Minister Nirmala Sitharaman on Tuesday announced revised slabs for the new income tax regime.
Sitharaman also announced that the standard deduction limit for salaried individuals under the new tax regime would be increased to Rs 75,000 from Rs 50,000. The deduction for family pension for pensioners was hiked to Rs 25,000 from Rs 15,000.
In the new tax regime, no tax is levied on annual income up to Rs 3 lakh.
Revised slabs under the new tax regime
| Income slabs | Tax rate |
|---|---|
| Up to Rs 3 lakh | Nil |
| 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% |
| Above Rs 15 lakh | 30% |
Earlier, a tax rate of 5% was applied to income between Rs 3 lakh and Rs 6 lakh, 10% to income between Rs 6 lakh and Rs 9 lakh and 15% to income between Rs 9 lakh and Rs 12 lakh.
Income from Rs 12 lakh to Rs 15 lakh was taxed at 20% and those earning above Rs 15 lakh were paying 30% as tax.
On Tuesday, Sitharaman claimed that as a result of the changes, a salaried employee would be able to save up to Rs 17,500 in income taxes.
The minister also said that two-thirds of taxpayers had availed of the new personal income tax regime in the previous fiscal year 2023-’24, according to the data available so far. This number was up from 58% of taxpayers in 2022-’23. The new tax regime was rolled out in February 2023.
The government has not yet decided on ending the old tax regime, Sitharaman said at a press conference on Tuesday.
Further, the government announced that corporate tax on foreign companies will be reduced from 40% to 35%.
Capital gains
Additionally, Sitharaman announced that long-term capital gains tax will be increased from 10% to 12.5%.
“For the benefit of the lower and middle-income classes, I propose to increase the limit of exemption of capital gains on certain financial assets to Rs 1.25 lakh per year,” she said.
The short-term capital gains tax was increased to 20% from 15%.
Also read: Budget 2024: Financial support, infrastructure projects announced for Bihar and Andhra Pradesh
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