In a riveting session at Parliament, Finance Minister Nirmala Sitharaman unfurled the transformative canvas of Budget 2024, placing the middle class at its heart. With a series of bold strokes, she reshaped the Income Tax landscape, promising substantial benefits for salaried employees and pensioners alike.
Key Highlights of Middle Class Budget 2024
Empowering Salaried Employees
Sitharaman announced a resounding victory for the middle class with a significant increase in the standard deduction, soaring from ₹50,000 to ₹75,000. This move aims to bolster the take-home income of millions, providing much-needed relief in these challenging times.
Enhanced Pension Support
For retirees dependent on family pensions, Budget 2024 brought a lifeline: an increase in deduction from ₹15,000 to ₹25,000. This enhancement is set to fortify post-retirement financial stability, ensuring a dignified life after years of service.
Progressive Tax Restructuring
Underpinning these reforms is a revamped tax structure, now more progressive than ever:
- Income up to ₹3 lakh: Nil tax
- ₹3 lakh to ₹7 lakh: 5%
- ₹7 lakh to ₹10 lakh: 10%
- ₹10 lakh to ₹12 lakh: 15%
- ₹12 lakh to ₹15 lakh: 20%
- Above ₹15 lakh: 30%
Steadfastness of the Old Regime
While the new regime received an overhaul, the old tax system remains untouched. Taxpayers opting for exemptions and deductions under the old regime will see no changes in their tax liabilities, ensuring continuity of choice.
Financial Implications
These reforms, while beneficial, come with fiscal considerations. Sitharaman acknowledged a revenue foregone of approximately ₹37,000 crore annually, with direct taxes accounting for ₹29,000 crore and indirect taxes contributing ₹8,000 crore. However, the reforms are expected to spur an additional ₹30,000 crore in revenue, resulting in a net revenue foregone of about ₹7,000 crore annually.
