The much-anticipated Budget 2024 has introduced significant changes to the income tax regime, aimed at simplifying the tax structure and providing relief to taxpayers across various income brackets. Finance Minister Nirmala Sitharaman presented the budget, highlighting the government’s commitment to making the tax system more transparent and taxpayer-friendly. The new income tax regime has been designed to offer greater benefits to middle-class taxpayers while promoting savings and investments. One of the major changes includes the revision of tax slabs, which have been structured to provide relief to individuals across different income levels.
Revised Tax Slabs
Under the new regime, the income tax slabs have been revised as follows:
– Income up to ₹2.5 lakh: No tax
– Income between ₹5 lakh and ₹10 lakh: 10%
– Income above ₹10 lakh: 20%
This restructuring aims to ease the tax burden on lower and middle-income groups, encouraging more people to participate in the formal economy.
Increased Standard Deduction
This move is expected to provide substantial relief to the working class, ensuring they have more disposable income to meet their daily needs. Senior citizens have been given special consideration in the new tax regime. The exemption limit for senior citizens (aged 60-80 years) has been raised to ₹3 lakh, while for super senior citizens (aged 80 and above), the limit is now ₹5 lakh. This change acknowledges the financial pressures faced by the elderly and aims to provide them with greater financial security.
Encouraging Savings and Investments
To foster a culture of savings and investments, the government has introduced several incentives. The tax deduction limit under Section 80C has been raised to ₹2 lakh from the previous ₹1.5 lakh. Additionally, the tax-free limit on interest income from savings accounts and fixed deposits has been increased to ₹50,000 for individuals and ₹75,000 for senior citizens.
Simplification of Tax Filing Process. In a bid to make tax compliance easier, the government has streamlined the tax filing process. The introduction of a pre-filled ITR form will simplify the process for taxpayers, reducing the chances of errors and ensuring timely submissions. The Finance Minister emphasized the need for a hassle-free tax filing experience, stating, “We want to make tax filing as simple and straightforward as possible, so taxpayers can focus on their financial planning rather than paperwork.”
Impact on Taxpayers
The new tax regime is expected to benefit a wide range of taxpayers. Middle-class families will find themselves with more disposable income due to reduced tax rates and increased standard deductions. Senior citizens will enjoy higher exemption limits and increased tax-free interest income, providing them with greater financial stability. However, it’s important to note that the new regime is optional. Taxpayers can choose between the new simplified regime and the old regime, depending on which one offers greater benefits. Financial experts suggest that individuals with significant investments in tax-saving instruments might still find the old regime more advantageous. The changes introduced in Budget 2024 reflect the government’s intention to create a more inclusive and efficient tax system. By providing relief to different segments of society and encouraging savings and investments, the new tax regime aims to stimulate economic growth and ensure a more equitable distribution of wealth. Taxpayers are advised to carefully evaluate their financial situation and choose the regime that best suits their needs.