Union Finance Minister Nirmala Sitharaman on Tuesday said she cannot take a call on whether the old tax regime will be done away with.
Can only say the intention is to make the tax regime simpler, she said. “Can’t say if there will be a sunset on the old regime.”
She has announced tweaks to the new income tax regime,including raising standard deduction from Rs 50,000 to Rs 75,000, and widening the slabs without changing the tax rates.
Also, deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000 under the new tax regime. This will provide relief to about 4 crore salaried individuals and pensioners.
Notably, the tweaks to the new tax regime will be effective from April 1, 2024 (Assessment Year 2025-26).
The lowest slab in the new tax regime increased to Rs 3 lakhfrom Rs 2.5 lakh. The tax structure is proposed to be revised as follows:
No tax for those earning up to Rs 3 lakh; 5% tax for slab of Rs 3-7 Lakh; 10% tax for slab of Rs 7-10 Lakh; 15% tax for slab of Rs 10-12 Lakh; 20% tax for slab of Rs 12-15 Lakh; 30% above Rs 15 lakh.
As a result of these changes, a salaried employee in the new tax regime stands to save up to ₹ 17,500 annually in income tax.
While addressing a press conference following the Budget presentation, Nirmala Sitharaman said, “…the attempt to widen the tax net is something which we have been repeatedly saying, that India’s tax net will have to be widened – whether it is in direct taxation or indirect.”
“Second, there are also now Public Sector Undertaking (PSU) dividends which are improving because the valuations have gone up really high, and their performance has also now substantially increased,” she added.
She also said that GST has decreased the tax incidence on common man, reduced compliance burden and logistics cost for trade and industry.