In her latest budget speech, the finance minister, Nirmala Sitharaman, has announced certain key changes, highly oriented toward strengthening the financial prospects of middle classes. The main revisions include increasing the standard deduction for salaried people from Rs 50,000 to Rs 75,000 per annum by 50%. This change may ensure a good deal of relief for about four crore salaried employees and pensioners.
Besides, Sitharaman brought in changes in the tax slabs in the new income tax regime, which would come into force from April 1, 2024, that is, Assessment Year 2025-26. This restructuring of the regime shall lead to a further rise in disposable income and is likely to save salaried employees up to Rs 17,500 annually in income tax.
The new tax regime in India keeps income up to Rs 3 lakh totally exempt from income tax. For incomes between Rs 3-7 lakh, there is a 5% tax rate; for income between Rs 7-10 lakh, it will be 10 percent; and on income between Rs 10-12 lakh, it will be 15%. It further escalates to 20% for Rs 12-15 lakh income earners and 30% for those above Rs 15 lakh.
This comes at a time when a massive majority of individual taxpayers were already showing a trend to shift into the new personal income tax regime in the last fiscal year, wherein more than 8.61 crore income tax returns were filed in the 2023-24 fiscal period.
It has also increased the deduction on family pension from Rs 15,000 to Rs 25,000 per annum for pensioners. All of these will put more money in the pockets of taxpayers, which will stimulate consumption and thereby lead to higher economic growth.
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