Tax payers falling in the highest tax bracket — those with a taxable income of Rs 15 lakh or more — will save Rs 7,500 on account of enhancement in the standard deduction limit under the NTR.
In a bid to provide surplus at the hands of the middle class, Finance Minister Nirmala Sitharaman announced an increase in the standard deduction to Rs 75,000 from Rs 50,000, and also tweaked the tax slabs under the simplified New Tax Regime (NTR) marginally. These decisions will provide a tax benefit of up to Rs 17,500 per year to individual taxpayers under the NTR.
The Old Tax Regime was left untouched in the Union Budget for 2024-25, and the additional savings offered under the NTR may be seen as further sweetening of the new regime in a bid to attract more salaried taxpayers to it. Over the past few years, the government has been trying to make the simple and exemption-free NTR the preferred tax regime for salaried taxpayers.
Tax payers falling in the highest tax bracket—those with a taxable income of Rs 15 lakh or more–will save Rs 7,500 on account of enhancement in the standard deduction limit under the NTR. In addition to this benefit, the rate rationalisation will lead to savings of Rs 10,000 for this segment of taxpayers, taking their total savings to Rs 17,500.
While all taxpayers with taxable income of over Rs 12 lakh will save Rs 10,000 on account of rate rationalisation, their savings on account of the increase in standard deduction would be lower than those in the top tax bracket. This is because the savings due to higher standard deduction are calculated based on the applicable income tax rate, which would be different for different income groups.
Earlier, those falling in Rs 3-6 lakh taxable income bracket paid income tax at the rate of 5 per cent. The FM announced a change in this slab to Rs 3-7 lakh. Similarly, the slab for 10 per cent tax rate has been changed from Rs 6-9 lakh to Rs 7-10 lakh. The tax slab for 15 per cent rate has been changed from Rs 9-12 lakh to 10-12 lakh.
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| 2023-24 | 2024-25 | ||
| Tax Slab (rate) | Tax amount (Rs) | Tax Slab (rate) | Amount (Rs) |
| Rs 3-6 lakh (5%)* | 15000 | Rs 3-7 lakh (5%)* | 20000 |
| Rs 6-9 lakh (10%) | 30000 | Rs 7-10 lakh (10%) | 30000 |
| Rs 9-12 lakh (15%) | 45000 | Rs 10-12 lakh (15%) | 30000 |
| Rs 12-15 lakh (20%) | 60000 | Rs 12-15 lakh (20%) | 60000 |
| Total Tax up to Rs 15 lakh | 1,50,000 | Total Tax up to Rs 15 lakh | 1,40,000 |
Tax payers will also benefit by up to Rs 7,500 on account of increase in standard deduction by Rs 25,000
