Union Minister of Finance and Corporate Affairs Nirmala Sitharaman updated the income tax slabs under the New Tax Regime in Budget 2024, providing salaried taxpayers with significant savings.
Income up to ₹3 lakh is exempt from taxation following the reorganisation of income tax bands. But after the adjustments from Budget 2024 take effect, the income band up to ₹7 lakh would be subject to a 5 percent tax rate, as opposed to the previous limit of ₹6 lakh. Similarly, income up to ₹10 lakh will now be subject to a 10% tax liability, up from ₹9 lakh previously.
The tax rates for the remaining income groups are unchanged.
Sitharaman has, however, also made significant changes to the greater standard deduction, which was increased from ₹50,000 to ₹75,000 starting in FY 2024–2025.
When all of these adjustments are taken into account, a salaried taxpayer in the 30% tax bracket may be able to save up to ₹17,500 in total tax under the new tax system.
Finance Minister Nirmala Sitharaman mentioned in her Budget speech on Tuesday that, due to recent changes, a salaried individual in the new tax regime could save up to ₹17,500 in income tax.
Let’s examine how this ₹17,500 was determined.
Let’s say a taxpayer makes ₹15,000,000 and is therefore subject to the 30% tax bracket.
- According to existing rates, the tax burden for income between ₹3-6 lakh is ₹15, 000, however under the most recent adjustments, it is ₹20,000. An additional 5,000 (₹5,000) in tax is due.
- The tax obligation for income between ₹9 and 12 lakh is 15 percent at the current rates, or ₹45,000. The new tax slabs impose a 15 percent tax obligation on income between ₹10 and 12 lakh, meaning that the total tax payable is ₹30,000. This amounts to a total savings of ₹15,000 (45,000 – 30,000).
- The overall savings when 1 and 2 are taken into account is ₹10,000 (15,000 – 5,000).b
| New Slabs | Rates | Tax | Old Slabs | Rates | Tax | Difference |
| 0-3 lakhs | 0% | – | 0-3 lakhs | 0% | – | |
| 3-7 lakhs | 5% | 20,000 | 3-6 lakhs | 5% | 15,000 | -5000 |
| 7-10 lakhs | 10% | 30,000 | 6-9 lakhs | 10% | 30,000 | – |
| 10-12 lakhs | 15% | 30,000 | 9-12 lakhs | 15% | 45,000 | 15,000 |
| 12-15 lakhs | 20% | 60,000 | 12-15 lakhs | 20% | 60,000 | – |
| 15 lakhs | 30% | 1,50,000 | 15 lakhs | 30% | 1,50,000 | – |
| Total | 2,90,000 | Total | 3,00,000 | 10,000 | ||
| Standard Deduction @ 30% | 75,000 | 50,000 | 7,500 | |||
| Grand Total | 17,500 |
4. A taxpayer in the thirty percent tax bracket can deduct an additional ₹25,000 from their standard deduction, which results in a total savings of ₹7,500 (30% of 25,000).
The entire savings come to ₹17,500 when you add 3 and 4.
Thus, with the revised rates under the new tax regime, a taxpayer earning ₹15,00,000 stands to save ₹17,500.
