Standard Deduction Budget 2024: FM heightens standard deduction to ₹75,000 under the new regime

Standard Deduction Budget 2024: Finance Minister Nirmala Sitharaman has announced an increase in the standard deduction for salaried employees by ₹25,000 in the new tax regime while presenting Budget 2024-25 in the Lok Sabha on Tuesday, July 23. The standard deduction has been increased to ₹75,000. It will apply to those who opt for the new tax regime.  

“For those opting for the new tax regime, the standard deduction for salaried employees to be increased from ₹50,000 to ₹75,000,” Nirmala Sitharaman announced. It was anticipated that the Finance Minister would increase the standard deduction to ₹1 lakh in the new tax regime.

However, the deduction will stay unchanged at ₹50,000 under the old tax regime. According to Nirmala Sitharaman, for family pensioners, the deduction will increase from ₹15,000 to ₹25,000 under the new regime.

The revised slabs are as follows:

• Up to 3,00,000: Nil
• From 3,00,001 to 7,00,000: 5%
• From 7,00,001 to 10,00,000: 10%
• From 10,00,001 to 12,00,000: 15%
• From 12,00,001 to 15,00,000: 20%
• Above 15,00,000: 30%

As a result, Nirmala Sitharaman stated that those choosing the new regime would save ₹17,500. Additionally, the Finance Minister unveiled plans for a thorough overhaul of the Income Tax Act of 1961 to enhance readability, reduce uncertainty, and minimize the potential for litigation.

Nirmala Sitharaman pledged to streamline the tax system for individual income taxpayers, aligning with previous efforts. She reaffirmed the government's commitment to simplifying tax regulations and structures, noting that over two-thirds of personal taxpayers had opted for the new tax regime in the fiscal year 2023-24.

Capital Gains taxation

• Short-term capital gains on specified financial assets now incur a tax rate of 20%, up from the current 15%.
• Long-term gains on both financial and non-financial assets now carry a tax rate of 12.5%, increased from the current 10%.
• The exemption limit on capital gains has been raised to ₹1.25 lakh.