Simpler and sweeter? How Budget 2024 will reduce taxes under the new, minimal exemptions tax regime

July Budget 2024 tax announcements for the simplified regime will reduce tax outgo across income slabs

It’s time for salaried tax-payers to fish out their calculators to compute the impact of Finance Minister Nirmala Sitharaman’s tax announcements in Budget 2024.

While the changes in the new -that is, simplified -income tax regime’s slabs will affect all individual tax-payers, salaried tax-payers and pensioners will also benefit from standard deduction, which will now go up by Rs 25,000 – from Rs 50,000 at present to Rs 75,000 post Budget.

It was widely expected that Budget would rejig tax slabs and hike standard deduction. Also, in line with expectations, finance minister has given a wide berth to the old, with-exemptions tax regime. "We cannot comment right now on whether there will be a sunset on the old tax regime as of now," said Finance Minister Nirmala Sitharaman during the post-Budget press conference.

According to the Finance Ministry’s data, the simplified tax structure was the regime of choice in the case of 70 percent of returns filed for the assessment year 2023-24 (FY 2022-23).

As per Deloitte India’s calculations, a salaried individual with an income of Rs 10 lakh opting for the simplified tax regime will net tax savings of Rs 13,000 once the changes announced in Budget 2024 take effect. This is due to the change in tax rate for this slab (down from 15 percent to 10 percent) and an additional standard deduction of Rs 25,000 (Rs 75,000 minus Rs 50,000) that she is now entitled to.

Likewise, an individual earning Rs 15 lakh will see a reduction of Rs 15,600 in tax outgo. For salaried individuals with incomes of Rs 1 crore and Rs 5 crore, the savings will be Rs 20,020 and Rs 22,750 respectively.