India’s 2024 budget introduced significant revisions to its new tax system, offering substantial tax benefits for many individuals. While the older tax system remains largely unchanged, sparking ongoing discussions about its potential replacement, the newer system continues to evolve with each budget cycle. This year’s adjustments are particularly beneficial for the middle class, streamlining tax brackets and increasing deductions.
A key change is the elevation of the standard deduction in the new tax regime from Rs. 50,000 to Rs. 75,000. Combined with the revised tax slabs, this effectively eliminates tax liability for individuals earning up to Rs. 7.75 lakhs annually. This simplification is achieved through a tiered structure: income between Rs. 3 and 7 lakhs is taxed at 5%; income between Rs. 7 and 10 lakhs at 10%; Rs. 10-12 lakhs at 15%; Rs. 12-15 lakhs at 20%; and income exceeding Rs. 15 lakhs at 30%. The minimum tax exemption limit remains at Rs. 3 lakhs.
This means an individual earning Rs. 7 lakhs, for instance, will pay no income tax under the new system. The changes specifically target those earning between Rs. 6-7 lakhs and Rs. 9-10 lakhs, offering considerable relief. However, the future of the tax system remains dynamic; further adjustments are anticipated in the 2025 budget.