Revised income tax slabs and standard deduction bring relief to salaried taxpayers and pensioners

In a move that promises to bring significant relief to salaried taxpayers and pensioners, Finance Minister Nirmala Sitharaman has announced a revamp of income tax slabs and an increase in the standard deduction under the new tax regime. This announcement, made during her Budget 2024 speech, aims to benefit over four crore salaried individuals and pensioners.

Under the new tax regime, the finance minister has restructured the income tax slabs to make them more favorable for taxpayers. This change is expected to ease the tax burden for many and encourage more taxpayers to opt for the new regime. The standard deduction under the new tax regime has been raised from Rs 50,000 to Rs 75,000, bringing cheer to both salaried individuals and pensioners. For family pensioners, the deduction will increase from Rs 15,000 to Rs 25,000 under the new regime. However, the standard deduction under the old tax regime will remain unchanged at Rs 50,000.

The finance minister highlighted that a salaried individual under the new tax regime stands to save Rs 17,500 in income tax. This adjustment will result in a revenue loss of Rs 29,000 crore in direct taxes for the government.

Continuing the government’s focus on simplifying tax structures and rules, Sitharaman reiterated that more than two-thirds of personal taxpayers opted for the new tax regime in the financial year 2023-24. She promised further measures to streamline the tax process for individual taxpayers, ensuring that the system is easier to understand and reducing the potential for disputes and litigations.

The finance ministry will undertake a comprehensive review of the Income Tax Act, aiming to simplify its provisions and make it more accessible. This review is expected to be completed within six months.

Sitharaman also announced the launch of the Vivaad to Vishwas Scheme 3.0 for 2024, aimed at resolving tax disputes efficiently. The National Pension System (NPS) deduction on employers’ contributions to employees’ basic salary has been increased from 10 percent to 14 percent. This change will apply to public sector companies and the private sector under the new regime.

The Budget 2024 announcements by Finance Minister Nirmala Sitharaman mark significant steps towards providing relief to taxpayers, simplifying the tax regime, and ensuring more transparency and ease in the tax process. The revised income tax slabs and increased standard deduction are poised to benefit millions of salaried individuals and pensioners, reflecting the government’s commitment to creating a more taxpayer-friendly environment.