Finance Minister Nirmala Sitharaman has introduced several changes to the new tax regime in Budget 2024, designed to make it more attractive while retaining the old tax structure.

These modifications could result in tax savings of up to Rs 17,500 for taxpayers compared to the current rates under the new tax regime.

Under the revised scheme, the income exemption limit remains at Rs 3 lakh, but the subsequent tax slabs have been adjusted:

• The second tax slab has been expanded from Rs 3 lakh to Rs 6 lakh, to Rs 3 lakh to Rs 7 lakh.
• The third slab now extends from Rs 7 lakh to Rs 10 lakh, increased from the earlier Rs 7 lakh to Rs 9 lakh.
• The fourth slab covers Rs 10 lakh to Rs 12 lakh, up from Rs 9 lakh to Rs 12 lakh. The remaining slabs remain unchanged.

Additionally, the standard deduction for salaried employees is proposed to increase from Rs 50,000 to Rs 75,000.

Breakdown of Savings Up to Rs 17,500

The expansion of the 5% tax slab results in a tax saving of Rs 5,000 (Rs 1,00,000 * 5%).

Similarly, the expansion of the 10% slab adds an additional saving of Rs 5,000 (Rs 1,00,000 * 5%, where 5% is the differential between 15% and 10%).

With the increase in the standard deduction by Rs 25,000, there is a savings of Rs 7,500 at 30%.

Thus, the total savings amount to Rs 17,500.

"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," stated Finance Minister Sitharaman during her budget speech.

Moreover, the deduction on family pensions for pensioners is proposed to be increased from Rs 15,000 to Rs 25,000. This initiative aims to provide significant relief to approximately four crore salaried individuals and pensioners.

The proposed changes in Budget 2024 are intended to make the new tax regime more appealing to a broader range of taxpayers.