Budget 2024: Key changes in tax rates announced under new tax regime

Finance Minister Nirmala Sitharaman has announced changes in the income-tax slabs in the Union Budget for FY 2024-25 under the new regime, as was widely speculated. No changes were made to the old tax regime.

Under the new tax regime, standard deduction has been raised to ₹75,000 from ₹50,000 earlier. Also, income tax slabs have been revised to provide relief to the middle class.

As per the proposed changes, taxpayers with up to ₹3 lakh of annual taxable income will continue to attract nil tax. The 5% tax bracket has now been extended to those with annual taxable income of ₹3 lakh to ₹7 lakh instead of ₹3 lakh to ₹6 lakh earlier.

The 10% tax rate would be applicable on taxable income of ₹7 lakh to ₹10 lakh per year instead of ₹6 lakh to ₹9 lakh earlier.

The 15% tax bracket would be applicable on annual taxable income of ₹10 lakh to ₹12 lakh. Earlier, this bracket was for annual taxable income of ₹9 lakh to ₹12 lakh.

Taxable income of ₹12 lakh to ₹15 lakh per year would continue to attract 20% tax. Similarly, income of ₹15 lakh and above would also be taxed at the earlier rate of 30%.

New tax regime: Existing tax slabs

New tax regime: Revised tax slabs

In Budget 2024, under the new tax regime, the tax rate structure has been proposed as follows:

Sitharaman said that a salaried employee will be able to save up to ₹17,500 per year in income tax after the changes proposed in the new tax regime.

FM Sitharaman had not announced any major change in her interim budget speech in February 2024. The last major tweak in income tax provisions was made during the Union Budget 2023 which introduced the proposal to allow standard deduction of ₹50,000 for salaried persons and pensioners from FY 2023-24 under the new tax regime. Standard deduction was not allowed in the new tax regime until FY23.