The standard deduction for salaried employees is proposed to be increased from Rs 50,000 to Rs 75,000. The deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000/-. This will provide relief to about four crore salaried individuals and pensioners, the Finance Minister said
New Delhi: Finance Minister Nirmala Sitharaman offered a bonanza for four crore salaried individuals and pensioners with the Budget announcements for 2024-25.
On Personal Income Tax Rates, FM Sitharaman announced two announcements to make for those opting for the new tax regime.
The standard deduction for salaried employees is proposed to be increased from Rs 50,000 to Rs 75,000.
The deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000/-.
This will provide relief to about four crore salaried individuals and pensioners, the Finance Minister said.
In the new tax regime, the tax rate structure is to be revised as follows;
-0-3 lakh rupee – Zero
-3-7 lakh – 5 per cent
-7-10 lakh – 10 per cent
-10-12 lakh – 15 per cent
-12-15 lakh – 20 per cent
-15 lakh and above – 30 per cent
“Salaried employees in the new tax regime will save up to Rs 17,500 in income tax,” the Finance Minister said.
She said that as per data available till now for the last fiscal, more than two-thirds have availed the new personal income tax regime.
A hike in standard deduction would mean more tax savings for salaried individuals and pensioners. The standard deduction has been hiked for the first time after five years. Last time, the standard deduction was hiked to Rs 50,000 in interim budget 2019 (effective from April 1, 2019).
Currently, standard deduction of Rs 50,000 is available under new as well as old tax regime. The benefit of standard deduction is available for those who have salary or pension income. Hence, only salaried people and pensioners are eligible to claim this deduction.
The income tax laws also allow a family pensioner having family pension to claim standard deduction under old as well as new tax regime. However, family pensioner can claim standard deduction of Rs 15,000 only.
It is important to note that the annuity payments (pension) received from insurance companies are taxable under the head “Income from other sources”. Hence, they are not eligible for standard deduction. However, family pension taxable under the same head is eligible for standard deduction.
Review of Income Tax Act announced in Union Budget
Meanwhile, Sitharaman announced a review of the Income Tax Act 1961 in Budget proposals for 2024-25.
“I am now announcing a comprehensive review of the Income-tax Act, 1961. The purpose is to make the Act concise, lucid and easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers. It will also bring down the demand embroiled in litigation. It is proposed to be completed in six months,” she said in her Budget speech.
“A beginning is being made in the Finance Bill by simplifying the tax regime for charities, TDS rate structure, provisions for reassessment and search provisions and capital gains taxation,” she said.
As per the proposal, the two tax exemption regimes for charities are proposed to be merged into one. The 5 per cent TDS rate on many payments is being merged into the 2 per cent TDS rate and the 20 per cent TDS rate on repurchase of units by mutual funds or UTI is being withdrawn. The TDS rate on e-commerce operators is proposed to be reduced from one to 0.1 per cent.
“Moreover, credit of TCS is proposed to be given in the TDS to be deducted from salary. Further, I propose to decriminalize delay for payment of TDS up to the due date of filing statement for the same. I also plan to provide a standard operating procedure for TDS defaults and simplify and rationalise the compounding guidelines for such defaults,” the Finance Minister said.
IANS