Budget 2024 Income Tax changes EXPLAINED: Salaried taxpayers to save Rs 17,500! How standard deduction hike, income tax slab changes in new tax regime will benefit you

Budget 2024 income tax changes explained: Salaried taxpayers have reason to cheer! Finance Minister Nirmala Sitharaman announced major changes in the new income tax regime during her Union Budget 2024 speech. These changes will give many salaried taxpayers a benefit of Rs 17,500 – provided that they are opting for the new income tax regime!
“Coming to Personal Income Tax Rates, I have two announcements to make for those opting for the new tax regime…as a result of these changes, a salaried employee in the new tax regime stands to save up to Rs 17,500/- in income tax,” Sitharaman said.
The standard deduction under the new income tax regime has been hiked from Rs 50,000 to Rs 75,000. Also the income tax slabs have been adjusted for FY 2024-25 so that the 5% tax rate is now applicable for income up to Rs 7 lakh. Some other changes have also been introduced.
Income Tax Slabs 2024-25 Budget 2024 Live Updates

New Income Tax Regime: What is the Rs 17,500 tax benefit?

So, salaried individuals at what income level will benefit the most from the income tax slab and standard deduction changes under the new income tax regime? How does this math work? We take a look:

As is evident from the table above, at various income levels, the benefits will vary. The base income tax benefit of Rs 17,500 announced by FM Sitharaman does not include the cess. It also doesn’t include surcharge at higher income levels. As per the analysis by EY, you will now have to pay zero tax of income up to Rs 7.75 lakh. For income up to Rs 10 lakh, you will annually save Rs 10,000 (without cess). If one were to include cess then the benefit will go up.
What are the latest income tax slabs FY 2024-25?
Surabhi Marwah, Tax Partner at EY India explains, “The changes in the new tax regime will benefit taxpayers. For instance, under Scenario 3, where the gross salary is Rs 20,00,000, the total tax payable under the current new tax regime amounts to Rs 2,96,400, whereas under the proposed new tax regime, the tax payable is reduced to Rs 2,78,200.”
“This translates to a direct saving of Rs 17,500 (excluding cess), thereby, highlighting the government’s commitment to providing a more simplified and beneficial tax structure for taxpayers,” she tells TOI.

What are the new income tax slabs under the new tax regime?

As per the changes announced by FM Sitharaman, following are the new income tax slabs for the new or simplified tax regime: