New tax slabs under the new tax regime

The Union Budget 2024 brought significant changes to the new tax regime, offering relief to a large section of taxpayers. This blog dives deep into the revised tax slabs for the new regime, helping you understand how these changes might impact your tax liability.

What is the new tax regime?

The new tax regime, introduced in 2020, offers a simplified tax structure with fewer deductions and exemptions. In exchange for giving up these deductions, taxpayers benefit from lower tax rates.

Understanding the revised slabs

Here's a breakdown of the new tax slabs for the new regime applicable for the financial year 2024-25 (Assessment Year 2024-25):

• Income up to ₹ 3,00,000: You pay Nil tax. This is a welcome change for low-income earners.
• Income between ₹ 3,00,000 and ₹ 7,00,000: You pay a concessional tax rate of 5%. This slab has been widened significantly compared to the previous limit of ₹ 5,00,000.
• Income between ₹ 7,00,000 and ₹ 10,00,000: You now pay a tax rate of 10%.
• Income between ₹ 10,00,000 and ₹ 12,00,000: The tax rate for this bracket is 15%.
• Income between ₹ 12,000,000 and ₹ 15,00,000: You fall under the 20% tax bracket.
• Income above ₹ 15,00,000: The highest tax rate of 30% applies.

Impact of the revised slabs

The revised slabs offer significant benefits to various income groups:

• Low-income earners get complete tax exemption up to ₹ 3,00,000.
• Taxpayers in the ₹ 3,00,000 - ₹ 7,00,000 bracket enjoy a lower tax burden due to the increased limit and reduced rate.
• Individuals in the ₹ 7,00,000 - ₹ 10,00,000 range see a marginal increase in tax liability compared to the previous regime but benefit from a simpler tax filing process.

Old regime vs new regime

While the new slabs offer advantages, it's crucial to compare them with the old tax regime before making a decision. In the old regime, you can claim various deductions and exemptions under sections like 80C, which can significantly reduce your taxable income. Carefully analyse your tax situation and deductions available under both regimes to determine which one offers a lower tax liability.

Conclusion

The revised tax slabs for the new regime aim to simplify the tax filing process and offer tax relief to a wider range of taxpayers. Carefully evaluate your income and available deductions to decide which regime best suits your situation. It's advisable to consult a tax advisor for personalised guidance on maximising your tax benefits under the new regime.