Understanding Union Budget 2024: New Income Tax Rates
FM Nirmala Sitharaman unveils new income tax rates and deductions in Union Budget 2024, allowing annual choice between old and new regimes.
Finance Minister Nirmala Sitharaman presented the Union Budget 2024 on 23rd July 2024, marking her seventh consecutive budget presentation in Parliament. This budget, effective from 1st April 2024, introduces significant changes to the income tax structure and various deductions.
Earlier this year, an Interim Budget was announced, which has now been updated with the full-fledged Union Budget for the year. The new income tax regime alters the tax slabs across different income brackets:
- Income up to ?3 lakh: Nil tax
- ?3 lakh to ?7 lakh: 5%
- ?7 lakh to ?10 lakh: 10%
- ?10 lakh to ?12 lakh: 15%
- ?12 lakh to ?15 lakh: 20%
- Above ?15 lakh: 30%
Additionally, the standard deduction for salaried employees has been raised from ?50,000 to ?75,000. Pensioners benefit from an increased deduction on family pension, now raised from ?15,000 to ?25,000. This adjustment means that a higher amount can be deducted from the total pension income before calculating tax liabilities.
However, the new tax regime eliminates several exemptions and deductions available in the old regime, such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), deductions under IT section 80C (for investments like PPF, life insurance, and home loans), IT section 80D (deduction for medical insurance), and Section 80U (deduction for disabled individuals).
Under the new regime, taxpayers will face lower tax rates but will lose out on these traditional deductions. Importantly, taxpayers have the option to choose between the new and old tax regimes annually based on their financial circumstances and investments. To opt for the old regime, taxpayers must submit their income tax returns with IT Form 10-IEA before the due date, seeking advice from their Chartered Accountants (CA) for personalized guidance.
It is advisable for taxpayers to consult with their CA to assess the impact of these changes on their finances, considering factors like income levels, investments, and tax-saving instruments. Employees should inform their employers about their chosen tax regime to ensure accurate Tax Deducted at Source (TDS) deductions from their salaries.
For more insights into the budget and detailed explanations on income tax changes, click here: https://www.youtube.com/watch?app=desktop&v=dNgHqIXtHog
As taxpayers navigate these changes, staying informed and seeking professional advice will be crucial in making informed financial decisions under the revised tax structure introduced in the Union Budget 2024.
