Budget 2024: Finance Minister Nirmala Sitharaman announced changes to the new income tax regime on Tuesday (July 23), presenting revised tax slabs and an increased standard deduction as part of the Budget 2024 measures.

These changes are aimed at providing relief to taxpayers and encouraging more individuals to opt for the new tax regime.

Key changes in the income tax regime

The Finance Minister has increased the lowest slab in the new tax regime to ₹3 lakh, up from the previous threshold of ₹2.5 lakh.

This change means that individuals with an annual income of up to ₹3 lakh will not have to pay any income tax.

The revised tax slabs under the new regime are as follows:

₹3 lakh to ₹7 lakh: 5% tax

₹7 lakh to ₹10 lakh: 10% tax

₹10 lakh to ₹12 lakh: 15% tax

₹12 lakh to ₹15 lakh: 20% tax

In addition to these revised slabs, the standard deduction has been increased to ₹75,000, up from the previous ₹50,000.

This enhancement in the standard deduction is expected to benefit a wide range of taxpayers by reducing their taxable income and overall tax liability.

On the other hand, tax rates under old tax regime has been kept unchanged.

Under the old regime, for income falling in the ₹2.5-5 lakh bracket, a 5% income tax is applicable.

Those earning up to ₹5 lakh can claim a rebate of ₹12,500 under Section 87A of the Income Tax (I-T) Act.

Individuals earning ₹5-10 lakh face a 20% tax rate.

For total incomes exceeding ₹10 lakh, a 30% tax rate is applicable.

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