<\/span><\/h2>\n\n\n\nNow the main question arrives: how much can an individual actually save because of the above-mentioned changes? Let\u2019s have an analysis on this.<\/p>\n\n\n\nWe will calculate the income tax based on the new slab rates and the slab rates prior to the Budget 2024-25. Suppose Raman works in an MNC and earns INR 13,50,000 from salary in a given financial year. Considering he has no other source of income, let\u2019s calculate his tax liability based on existing and revised slab rates of new tax regime:<\/p>\n\n\n\n
Based on the existing slab rates (prior to Budget 2024-25)<\/strong><\/p>\n\n\n\nSalaried Income = INR 13,50,000<\/p>\n\n\n\n
Net Income after standard deduction of INR 50,000 = INR 13,00,000<\/p>\n\n\n\n
Tax Calculation<\/strong><\/p>\n\n\n\nSlab (INR)<\/th> Income Tax Rate<\/th> Income Tax (INR)<\/th><\/tr><\/thead> Up to 3,00,000<\/td> 0%<\/td> 0<\/td><\/tr> 3,00,001 to 6,00,000<\/td> 5%<\/td> 15,000<\/td><\/tr> 6,00,001 to 9,00,000<\/td> 10%<\/td> 30,000<\/td><\/tr> 9,00,001 to 12,00,000<\/td> 15%<\/td> 45,000<\/td><\/tr> 12,00,001 to 13,00,000<\/td> 20%<\/td> 20,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\nTotal tax payable as per the existing slabs of new tax regime is INR 1,10,000.<\/p>\n\n\n\n
Based on New Slab Rates (announced in Budget 2024-25)<\/strong><\/p>\n\n\n\nSalaried Income = INR 13,50,000<\/p>\n\n\n\n
Income after Standard Deduction of INR 75,000 = INR 12,75,000<\/p>\n\n\n\n
Tax Calculation<\/strong><\/p>\n\n\n\nSlab (INR)<\/th> Income Tax Rate<\/th> Income Tax (INR)<\/th><\/tr><\/thead> Up to 3,00,000<\/td> 0%<\/td> 0<\/td><\/tr> 3,00,001 to 7,00,000<\/td> 5%<\/td> 20,000<\/td><\/tr> 7,00,001 to 10,00,000<\/td> 10%<\/td> 30,000<\/td><\/tr> 10,00,001 to 12,00,000<\/td> 15%<\/td> 30,000<\/td><\/tr> 12,00,001 to 12,75,000<\/td> 20%<\/td> 15,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\nTotal tax payable as per latest slabs of the new tax regime is INR 95,000.<\/p>\n\n\n\n
So, in our example, if an individual is earning INR 13.5 lakhs from salary, then he or she can save INR 15,000 in taxes based on the revised tax slabs under new tax regime.<\/p>\n\n\n\n
Read Also: <\/strong>Budget 2024: F&O Trading Gets More Expensive?<\/a><\/p>\n\n\n\n<\/span>Conclusion<\/span><\/h2>\n\n\n\nIn summation, the tax slab rate changes for new tax regime introduced in Budget 2024, along with an increase in the standard deduction, will result in increased tax savings for the middle class. The reduced tax liability will result in a rise in disposable income, resulting in an increase in consumption and ultimately end up in boosting the growth of the Indian economy.<\/p>\n\n\n\n
However, you must be wondering why the government has announced these changes. If people pay less tax, doesn’t that mean the government earns less? The answer to this is not that simple. There are a few changes announced in the Budget 2024-25 which are not beneficial for the general public. For example, there’s an increase in the Short-Term and Long-Term Capital Gains tax rates, removal of the indexation benefit for real estate, etc. We’ll discuss these changes in more detail in another blog.<\/p>\n\n\n\n
<\/span>Frequently Asked Questions (FAQs)<\/span><\/h2>\n\n\nWhat is Income Tax?<\/h3> Income tax is the tax imposed on the income or profits earned by individuals and businesses. It is a direct tax and a major source of revenue for the government.<\/p>
What is standard deduction?<\/h3> A standard deduction is a flat deduction that an individual can subtract from the total salary or pension earned in a given financial year.<\/p>
In which regime are the changes introduced in Budget 24-25?<\/h3> The govt. introduced changes in slab rates of the new tax regime in the Union budget of 2024-25.<\/p>
What are the changes introduced with respect to the standard deduction in Budget 2024-25?<\/h3> The standard deduction has been hiked from INR 50,000 to INR 75,000 for salaried individuals and from INR 15,000 to INR 25,000 for family pensioners.<\/p>
What will be the impact of increased standard deduction for the middle class?<\/h3> An increase in the standard deduction will result in higher tax savings and higher disposable income.<\/p><\/ul><\/div>","protected":false},"excerpt":{"rendered":"
The Government of India introduced the Union budget for the 2024-25 on July 23, 2024. It was the first budget of the third term of the Modi Government. The budget featured a wide array of changes to achieve economic development targets. For the middle class, some of the key features of the budget are introduction […]<\/p>\n","protected":false},"author":3,"featured_media":8574,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"is_paper_insight":false,"paper_insight_image":0,"paper_insight_pdf":0,"paper_insight_ppt":0,"footnotes":""},"categories":[18],"tags":[],"class_list":["post-8555","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance"],"acf":{"freelancer":"Harjyot"},"yoast_head":"\n
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