Taxing times ahead? Here are key tax changes introduced in the 2024-25 Union Budget

The Union Finance Minister, Nirmala Sitharaman presented the 2024-25 Union Budget on Tuesday. The FM in her seventh Budget unveiled a slew of changes in the personal taxation slab.

In a speech that spanned an hour, the 64-year-old Union Minister indicated that the government is keen on salaried individuals opting for the new tax regime.

The new tax regime announced today revises the tax slabs, succeeding the current 'new tax regime' introduced in the Union Budget 2020.

Here's a clear summary of the new tax rates:

Income up to Rs 3 lakh: No tax

Income from Rs 3 lakh to Rs 7 lakh: 5%

Income from Rs 7 lakh to Rs 10 lakh: 10%

Income from Rs 10 lakh to Rs 12 lakh: 15%

Income from Rs 12 lakh to Rs 15 lakh: 20%

Income above Rs 15 lakh: 30%

Indiatimes

Sitharaman announced: "As a result of these changes, a salaried employee in the new tax regime could save up to Rs 17,500 in income tax."

Nirmala Sitharaman/ PTI

Here are the other important changes announced in the Union Budget 2024-25:

• An increase in the standard deduction has been announced, from Rs 50,000 to Rs 75,000 under the new income tax regime.
• The deduction for family pensions will be increased from Rs 15,000 to Rs 25,000.
• 2% TDS is being withdrawn on Mutual funds
• The credit of Tax Collected at Source (TCS) to be applied directly to salary
• To enhance social security benefits, the proposed changes include increasing the employer¡¯s deduction for contributions to the National Pension System (NPS) from 10% to 14% of the employee¡¯s salary. Additionally, employees in the private sector, public sector banks, and undertakings who choose the new tax regime will also benefit from a deduction of up to 14% of their salary for NPS contributions.
• The Securities Transaction Tax (STT) on Futures contracts will increase to 0.2%, and on Options contracts to 0.1%. Additionally, income from share buybacks will now be taxed in the hands of the recipient. The tax deduction for National Pension System (NPS) contributions will be raised from 10% to 14% of salary, benefiting both government employees and those in private companies participating in the NPS.

Other than the changes, the government has also announced a comprehensive review of the Income Tax Act to enhance its clarity.

"I announce a comprehensive review of the Income Tax Act 1961. This will reduce disputes and litigation. It is proposed to be completed in 6 months," Sitharaman said.

In her presentation of the Union Budget for 2024-25, Finance Minister Nirmala Sitharaman also revealed plans to introduce a Standard Operating Procedure (SoP) for TDS defaults and to simplify the compounding of such offences.

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