Standard Deduction Raised and Slab Rate of the New Tax on Income Policy Revised

Standard Deduction Raised and Slab Rate of the New Tax on Income Policy Revised

The government announced on Tuesday an increase in the standard deduction to Rs 75,000 from Rs 50,000 in the Union Budget 2024–25, a move that is expected to benefit salaried individuals, providing them with higher tax savings and greater disposable income.
The standard deduction in the new tax regime was raised from Rs 5 lakh to Rs 7 lakh in the Budget 2019. Initially, the new tax regime did not contain a standard deduction, but this was included as an incentive to move to the new system in Budget 2023.

Tax slab rates in the new tax regime have also been revised in the Budget 2024 presented by Finance Minister Nirmala Sitharaman. These revised slabs are set to enable salaried employees to save up to Rs 17,500, she said.
There will be no tax on income up to Rs 3 lakh. Income from Rs 3 lakh to Rs 7 lakh will be taxed at 5%. Income from Rs 7 lakh to Rs 10 lakh will be taxed at 10%. Income from Rs 10 lakh to Rs 12 lakh will be taxed at 15%. Income from Rs 12 lakh to Rs 15 lakh will be taxed at 20%. Income earned above Rs 15 lakh will be taxed at 30%.
The first two income brackets have been extended by a lakh and the brackets of the last two slabs remain unchanged.

Amended Tax Slabs

Previous Tax Slabs

The pervious slab in the new tax regime before this revisions had the lowest slab rates at Rs 3 lakh. Income above Rs 3 lakh and up to Rs 6 lakh was taxed at 5%, and the rate rose by 5 percentage points for every slab above that, with the highest rate on income above Rs 15 lakh at 30%.

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