The Union Budget 2024-2025 presented by Finance Minister Nirmala Sitharaman introduces several significant tax changes aimed at providing relief to taxpayers and streamlining the tax regime. Here are the key changes and their potential impacts:
1. Income Tax Adjustments
- Revised Tax Slabs: The new tax regime reduces the number of tax slabs from six to five, with the exemption limit increased to ₹3 lakh. The new slabs are:
- ₹0 – ₹3 lakh: Nil
- ₹3 – ₹6 lakh: 5%
- ₹6 – ₹9 lakh: 10%
- ₹9 – ₹12 lakh: 15%
- ₹12 – ₹15 lakh: 20%
- Above ₹15 lakh: 30%
2. Standard Deduction Increase
- Salaried Employees: The standard deduction for salaried individuals is increased from ₹50,000 to ₹75,000 per annum.
- Pensioners: The deduction on family pensions is increased from ₹15,000 to ₹25,000.
3. Surcharge Reduction
- The highest surcharge rate on personal income tax has been reduced from 37% to 25% for incomes above ₹2 crore. This change reduces the maximum tax rate from 42.74% to 39%.
4. Leave Encashment Exemption
- The tax exemption limit on leave encashment for non-government employees at retirement has been increased from ₹3 lakh to ₹25 lakh.
5. Default Tax Regime
- The new income tax regime will now be the default regime. However, taxpayers still have the option to switch to the old regime if they prefer.
Impacts and Implications
- Middle-Class Relief: The changes in tax slabs and the increase in standard deduction are expected to provide significant relief to middle-class taxpayers, reducing their tax burden and increasing disposable income.
- High-Income Earners: The reduction in the highest surcharge rate benefits high-income earners, making the overall tax regime more attractive and competitive.
- Simplification of Tax Structure: The new tax regime aims to simplify the tax structure, making it easier for taxpayers to comply with tax laws without the need for extensive tax planning.
Overall, the tax changes in the Budget 2024-2025 are designed to promote equity and simplify the tax process, while also boosting consumer spending by increasing disposable income for a large segment of the population.
