Budget 2024: FM Nirmala Sitharaman’s 5 key income tax announcements for the middle class

Budget 2024: Finance Minister Nirmala Sitharaman announced significant changes to the Income Tax structure, which will benefit the middle class, while presenting the Budget 2024 in Parliament on Tuesday, July 23. 

Here are the five key takeaways to note from the changes to the Income Tax regime announced in Budget 2024:

1. Deduction hike for salaried employees: The Finance Minister announced a significant increase in employee standard deduction under the new tax regime. The standard deduction is proposed to rise from ₹50,000 to ₹75,000. 
2. Enhanced deduction for family pension: For pensioners, the deduction on family pension is proposed to be increased from ₹15,000 to ₹25,000. This enhancement will relieve those who receive a family pension, ensuring better post-retirement financial stability.
3. Revised tax slabs under the new regime: The new tax regime has undergone a restructuring of tax rates, offering a more progressive structure. The revised tax slabs are as follows:
   • Income up to ₹3 lakh: Nil
   • Income between ₹3 lakh and ₹7 lakh: 5 per cent
   • Income between ₹7 lakh and ₹10 lakh: 10 per cent
   • Income between ₹10 lakh and ₹12 lakh: 15 per cent
   • Income between ₹12 lakh and ₹15 lakh: 20 per cent
   • Income above ₹15 lakh: 30 per cent
4. No changes in the old tax regime: While the new tax regime received several updates, there were no announcements of changes in the old tax regime. Taxpayers who prefer the old system, which includes various exemptions and deductions, will not see any changes in their tax liabilities based on the Budget 2024.
5. Impact on government revenue: The proposed tax reforms will notably impact government revenue. The Finance Minister stated that these changes would result in a revenue forgone of about ₹37,000 crore, with ₹29,000 crore from direct taxes and ₹8,000 crore from indirect taxes. However, the government also expects to mobilize an additional ₹30,000 crore in revenue, leading to a net revenue forgone of approximately ₹7,000 crore annually.