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Budget 2024: New Income Tax Slabs Announced, Middle Class Gets No Relief

• ByStartupStory     |    July 23, 2024

In the Union Budget 2024-25, Finance Minister Nirmala Sitharaman unveiled new income tax slabs under the revised tax regime, offering minimal relief to the middle class. The Standard Deduction limit has been increased from Rs 50,000 to Rs 75,000, falling short of the widely anticipated Rs 1 lakh increase. Rajarshi Dasgupta, Executive Director of AQUILAW, noted, “No change has been prescribed in the standard deduction in the old tax regime.”

There have been no changes to the tax slabs in the old tax regime, despite expectations for adjustments to combat inflation. Adhil Shetty, CEO of Bank Bazaar, commented on the mixed outcomes, stating, “With the income tax slabs, it’s a case of winning some and losing some. The slight enhancements in the standard deduction, the new tax regime slabs, and the increase in the tax-free Long Term Capital Gains Tax (LTCG) threshold mean you’ll have marginally higher tax-free income. The Budget speech suggests savings of Rs 7,500. However, the higher tax rates on both LTCG and STCG could significantly impact those with substantial capital gains. Taxpayers anticipated some inflation adjustment for the old regime slabs, but this appears unlikely.”

Adoption of the New Tax Regime

The finance minister highlighted that more than two-thirds of taxpayers adopted the new income tax regime in FY24. The Budget presentation also proposed simplifying tax regimes for charities and decriminalising delays in filing TDS.

Corporate Tax Rate Reduction

While the old tax regime remains unchanged, Budget 2024 includes a significant reduction in the corporate tax rate, decreasing it from 40% to 35%.

Income Tax Slabs

India’s income tax system operates on a slab basis, assigning different tax rates to various income ranges. This progressive system ensures fairness, with income tax slabs typically revised annually during the budget to maintain equity across different taxpayer groups.

New Income Tax Slabs

The new income tax slabs proposed in Budget 2024 are as follows:

• Up to Rs 3,00,000: Nil
• Rs 3,00,001 to Rs 7,00,000: 5%
• Rs 7,00,001 to Rs 10,00,000: 10%
• Rs 10,00,001 to Rs 12,00,000: 15%
• Rs 12,00,001 to Rs 15,00,000: 20%
• Above Rs 15,00,000: 30%

Previous Income Tax Slabs Under the New Regime

Before Budget 2024, the income tax slabs under the new regime were:

• Up to Rs 3,00,000: Nil
• Rs 3,00,001 to Rs 6,00,000: 5%
• Rs 6,00,001 to Rs 9,00,000: 10%
• Rs 9,00,001 to Rs 12,00,000: 15%
• Rs 12,00,001 to Rs 15,00,000: 20%
• Above Rs 15,00,000: 30%

Old Income Tax Regime Slabs

The old tax regime remains unchanged for individuals below 60 years and NRIs:

• Up to Rs 2,50,000: Nil
• Rs 2,50,001 to Rs 5,00,000: 5%
• Rs 5,00,001 to Rs 10,00,000: 20%
• Above Rs 10,00,001: 30%

Capital Gains Taxation

The Budget also proposed changes to the capital gains taxation regime. Finance Minister Sitharaman stated, “Short-term capital gains on certain assets will attract a 20% tax, while all other financial and non-financial assets will be taxed at the applicable income tax rate. I propose to increase the capital gains exemption limit to Rs 1.25 lakh per year. The LTCG on specified assets will be hiked to 12.5%. Unlisted bonds and debt mutual funds will continue to be taxed at the applicable rate.”

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