Finance Minister Nirmala Sitaraman in The Union Budget 2024 introduces significant changes to the income tax regime, with notable revisions to new regime tax slabs. Here’s a detailed comparison to help taxpayers understand the impacts of the new adjustments.
New Regime Tax Slabs: Revised vs. Previous
Revised Tax Slabs:
- 0 to 3 lakh: Nil
- 3 to 7 lakh: 5%
- 7 to 10 lakh: 10%
- 10 to 12 lakh: 15%
- 12 to 15 lakh: 20%
- Above 15 lakh: 30%
Previous Tax Slabs:
- Up to 3 lakh: Nil
- 3 to 6 lakh: 5%
- 6 to 9 lakh: 10%
- 9 to 12 lakh: 15%
- 12 to 15 lakh: 20%
- Above 15 lakh: 30%
Key Changes:
- The revised new regime now includes a higher standard deduction of 75,000, up from the previous 50,000.
- The income range for the 5% tax rate has been extended from 3-6 lakh to 3-7 lakh.
- The thresholds for higher tax rates remain the same, but the new regime adds more granularity to the income slabs.
Also Read: LIVE: Union Budget 2024. Key details of positives and negatives
Old Regime Tax Slabs
- Up to 2.5 lakh: Nil
- 2.5 to 5 lakh: 5%
- 5 to 10 lakh: 20%
- Above 10 lakh: 30%
Comparison Insights:
- The new regime tax slabs offer lower tax rates for income between 3-7 lakh, compared to the old regime’s 2.5-5 lakh bracket.
- The 20% tax rate in the new regime starts from 10 lakh, compared to the 5-10 lakh bracket in the old regime.
- For high-income earners (above 15 lakh), the tax rate remains unchanged at 30%, but the new regime provides more intermediate slabs, potentially reducing the tax burden for those in the 7-15 lakh range.
Impact on Taxpayers:
- Lower Income Brackets: Taxpayers in the lower and middle-income brackets may benefit from the extended 5% slab range and the increased standard deduction.
- Higher Income Brackets: While the new regime maintains the same 30% rate for the highest income bracket, the additional granularity in intermediate slabs could offer some relief.
Overall, the new regime is designed to simplify the tax structure while offering benefits through a higher standard deduction and extended lower tax brackets. Taxpayers can evaluate which regime suits them best based on their income levels and financial goals.
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