The Union Budget 2024 introduced new tax slab structures that aim to streamline income tax in India while encouraging higher compliance and offering moderate relief to taxpayers. As the Indian economy continues its recovery post-pandemic, the government’s focus remains on simplifying taxation, widening the tax base, and maintaining fiscal discipline. Understanding the changes in tax slabs for the financial year 2024-25 is essential for individuals, salaried professionals, and businesses to manage their finances efficiently and make informed decisions.
Revised Income Tax Slabs for FY 2024-25
The Budget 2024 maintained the dual income tax regime structure: theold tax regimewith exemptions and deductions, and thenew tax regimewith lower tax rates but limited deductions. The Finance Minister clarified that the new regime will continue to be the default, although taxpayers still have the option to choose between the two when filing returns.
New Tax Regime Slabs
Here is the revised tax slab under the new regime for individuals below 60 years of age:
- Income up to â¹3,00,000 Nil
- â¹3,00,001 to â¹6,00,000 5%
- â¹6,00,001 to â¹9,00,000 10%
- â¹9,00,001 to â¹12,00,000 15%
- â¹12,00,001 to â¹15,00,000 20%
- Above â¹15,00,000 30%
This structure increases the basic exemption limit from â¹2.5 lakh to â¹3 lakh and ensures a more gradual tax rate increase, benefiting middle-income earners. A standard deduction of â¹50,000 is also allowed under the new regime, making it more attractive than before.
Old Tax Regime Slabs
For those who opt for the old regime, the slabs remain unchanged:
- Income up to â¹2,50,000 Nil
- â¹2,50,001 to â¹5,00,000 5%
- â¹5,00,001 to â¹10,00,000 20%
- Above â¹10,00,000 30%
The old regime continues to allow various deductions like Section 80C (investments up to â¹1.5 lakh), 80D (health insurance premiums), HRA, LTA, and interest on home loans.
Key Highlights of Budget 2024 for Taxpayers
Retention of Dual Tax Regime
The government has chosen to retain both tax regimes, offering flexibility. While the new regime is being promoted for its simplicity, the old regime remains useful for taxpayers who benefit from multiple exemptions and deductions.
No Change in Surcharge Rates
Surcharge rates for high-income individuals have not been revised. The maximum effective tax rate under the new regime continues to be capped at 39%, offering relief to high earners compared to the older regime where it could go up to 42.74%.
Standard Deduction Retained
The standard deduction of â¹50,000 under the new tax regime has been retained, which offers uniform benefit to all salaried taxpayers and pensioners, even without additional exemptions.
Tax Slabs for Senior and Super Senior Citizens
Under the old tax regime, senior citizens (60 to 80 years) and super senior citizens (above 80 years) enjoy higher basic exemption limits:
Senior Citizens (60 to 80 years)
- Up to â¹3,00,000 Nil
- â¹3,00,001 to â¹5,00,000 5%
- â¹5,00,001 to â¹10,00,000 20%
- Above â¹10,00,000 30%
Super Senior Citizens (Above 80 years)
- Up to â¹5,00,000 Nil
- â¹5,00,001 to â¹10,00,000 20%
- Above â¹10,00,000 30%
These benefits are only available under the old regime. If they choose the new regime, the regular slabs applicable to other individuals are followed.
Choosing Between the Two Regimes
Taxpayers now face the decision of choosing the regime that minimizes their tax liability. The ideal choice depends on income structure, investment habits, and eligible deductions. For instance:
- If you claim significant deductions under 80C, 80D, and HRA, the old regime may be more beneficial.
- If you don’t invest in tax-saving instruments or prefer a straightforward approach, the new regime might offer lower taxes.
Taxpayers can switch between regimes every year if they do not have income from business or profession. For those with such income, switching is allowed only once in a lifetime unless they cease their business.
Impact on the Middle Class
The Budget 2024 tax slabs favor the middle-income group, offering more savings through higher exemption limits and a smoother tax rate progression in the new regime. With the standard deduction, a person earning â¹7 lakh effectively pays zero tax due to rebate benefits under Section 87A.
This structure helps salaried employees and pensioners the most, as they can now retain more disposable income without complex tax planning. It aligns with the government’s goal to simplify tax compliance and boost consumer spending.
Corporate and Business Taxation
While the topic focuses on personal tax slabs, it’s worth noting that Budget 2024 also maintains the corporate tax rate at 22% (effective 25.17%) for domestic companies, and 15% for new manufacturing units. Startups continue to benefit from tax holidays and exemption windows extended till March 2025.
Tax Audits and Compliance
Budget 2024 does not bring major compliance burdens for small taxpayers. The tax audit threshold remains at â¹10 crore for businesses using digital transactions for most of their receipts and payments, encouraging digitalization and transparency.
Rebate under Section 87A
Under the new regime, individuals with income up to â¹7 lakh continue to receive a rebate under Section 87A, which results in zero tax liability. This provision benefits lower-income groups and encourages them to file returns even if they fall below the taxable limit, strengthening formal economic participation.
Tax Planning Strategies Post Budget 2024
With the updated Budget 2024 tax slab in place, here are a few tax planning strategies to consider:
- Compare tax liability under both regimes using online tax calculators or expert advice before filing.
- If opting for the old regime, make full use of deductions under 80C, 80D, and home loan interest (Section 24).
- Consider long-term investments in ELSS, PPF, and NPS to save tax under the old system.
- For professionals with simpler income, the new regime may save time and paperwork while offering lower rates.
The Budget 2024 tax slab revision reaffirms the government’s intent to simplify personal taxation and enhance compliance while maintaining stability. With two tax regimes available, individuals can now make informed choices tailored to their financial goals. Whether you’re a salaried employee, pensioner, or freelancer, understanding these slabs and planning accordingly can help optimize your tax outgo and ensure better financial well-being in the year ahead.