The common man benefits in the budget.
Finance Minister Nirmala Sitharaman presented the full budget for 2024-25. In this regard, changes have been made in the new income tax regime and the government has increased the standard deduction limit from Rs 50,000 to Rs 75,000. How will the common man benefit from this and will his income of Rs 7.75 lakh become tax-free? You can understand her complete calculation here.
In this regard, tax expert Balwant Jain says that the government has retained the tax refund benefits in the new tax regime as before. Thus, individuals’ income up to Rs 7.75 lakh will be tax-free.
What is the calculation of tax-free income?
Under the new tax regime, the government had introduced standard deduction last year. Then its limit was kept at Rs 50,000. Now it has been increased to Rs 75,000. In last year’s budget, the government had exempted income of Rs 7 lakh from tax under the new tax regime. The government used to give tax rebate under Section 87A of the Income Tax Act on tax payable by an individual on income up to Rs 7 lakh.
This means that as per the tax slab of that time, the tax on a common man in the Rs 3 to Rs 6 lakh and Rs 6 to Rs 9 lakh tax slabs was Rs 25,000. The government waived it, i.e. did not charge tax on him.
This is how you will benefit from the new slab
According to tax expert Balwant Jain, now the government has increased the slab from Rs 3 to Rs 6 lakh to Rs 7 lakh in the new tax regime. The tax rate on this is 5 per cent. So, in this slab, the income tax of a common man up to Rs 7 lakh will be Rs 16,250, on which the government will give a rebate, i.e. despite this tax being made, the government will not collect it from you by granting you exemption under Section 87A. Apart from this, your standard deduction benefit will also be Rs 75,000. In this case, your effective taxable income will be Rs 7.75 lakh.
If the income exceeds Rs 7.75 lakh
If you join the new tax regime, your tax calculation will be as per the new slab. So, if your effective income exceeds Rs 7.75 lakh, then your tax calculation will be zero up to Rs 3 lakh, 5% from Rs 3 to Rs 7 lakh, 10% from Rs 7 to 10 lakh, 15% from Rs 10 to 12 lakh, between Rs 12 and Rs 15 lakh it will be 20% and above Rs 15 lakh it will be 30%.
