Nirmala Sitharaman, Union Minister of Finance, Government of India unveiled changes to personal income tax rates in the Union Budget 2024, aiming to provide relief to salaried employees and pensioners. Announced in the Lok Sabha, these revisions are set to benefit approximately 4 crore individuals.
“Indian professionals working in multinationals get ESOPs and invest in social security schemes and other movable assets abroad. Non-reporting of such small foreign assets has penal consequences under the Black Money Act. Such non-reporting of movable assets up to 20 lakh rupees is proposed to be depenalized,” said Sitharaman.
Sitharaman proposed an increase in the standard deduction for salaried employees from Rs 50,000 to Rs 75,000. Similarly, the deduction on family pensions for pensioners will be enhanced from Rs 15,000 to Rs 25,000. These changes are designed to offer substantial relief to a large segment of taxpayers, particularly benefiting salaried individuals and pensioners.
Revised Tax Rate Structure in the New Income Tax Regime
The new tax regime will see a revised tax rate structure, providing a more streamlined and taxpayer-friendly approach. The proposed tax rates are as follows:
- 0 to Rs 3 lakh: Nil
- Rs 3 to Rs 7 lakh: 5%
- Rs 7 to Rs 10 lakh: 10%
- Rs 10 to Rs 12 lakh: 15%
- Rs 12 to Rs 15 lakh: 20%
- Above Rs 15 lakh: 30%
With these changes, a salaried employee in the new tax regime could save up to Rs 17,500 in income tax, offering a notable financial respite, said the minister.
Financial Implications of the Proposed Changes
These proposals will have a significant impact on the government’s revenue. Sitharaman highlighted that the total revenue foregone due to the changes in direct and indirect taxes amounts to about Rs 37,000 crore, with Rs 29,000 crore in direct taxes and Rs 8,000 crore in indirect taxes. Meanwhile, additional revenue mobilization is expected to be around Rs 30,000 crore, resulting in a net revenue foregone of approximately Rs 7,000 crore annually.
