How you can save Rs 17,500 in New Tax Regime for FY 2024-25

Finance Minister Nirmala Sitharaman announced changes aimed at benefiting the middle class in the Union Budget for 2024-25. The standard deduction has been increased from Rs 50,000 to Rs 75,000 under the New Tax Regime (NTR), and the tax slabs have been slightly adjusted. These changes will provide individual taxpayers with up to Rs 17,500 in annual tax savings under the NTR.

For those in the highest tax bracket (with taxable incomes of Rs 15 lakh or more), the increase in the standard deduction will save them Rs 7,500. Additionally, the adjusted tax rates will provide another Rs 10,000 in savings, totaling Rs 17,500.

Taxpayers with incomes over Rs 12 lakh will also benefit from the rate adjustments, saving Rs 10,000. However, their savings from the increased standard deduction will be less than those in the highest tax bracket because the applicable income tax rate varies.

Under the revised tax slabs, incomes between Rs 3-7 lakh will now be taxed at 5%, Rs 7-10 lakh at 10%, and Rs 10-12 lakh at 15%. The Old Tax Regime remains unchanged, while the New Tax Regime continues to be promoted for its simplicity and exemption-free approach.

The government’s adjustments aim to make the NTR more attractive to salaried taxpayers, providing significant tax savings and streamlining the tax filing process.

How you can save Rs 17,500 in New Tax Regime for FY 2024-25:

Suppose your taxable salary is Rs 20 lakhs in FY2024-25, then you can potently save Rs 17,500.

Rs 10,000 due to the difference in tax structure and Rs 7,500 on account of the difference in Standard Deduction.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.