Know which tax regime is more attractive for salaried people

Taxpayers using old tax regime may consider switching to the new tax regime as the latter has seen an expansion of income slabs leading to tax reduction

- MONIKA YADAV

THE Union Budget 2024 has introduced enhanced tax relief in the new tax regime by adjusting the income tax slabs, making it more appealing compared to the old tax regime. As a result, taxpayers currently using the old tax regime may want to consider switching to the new tax regime for the 2024-25 financial year.

According to the Budget 2024 proposals, the new tax regime has seen an expansion of income slabs, leading to a reduction in tax rates. Specifically, the tax rate for the income slab between ₹6,00,000 and ₹7,00,000 has been decreased from 10% to 5%. Additionally, for the income range of ₹9,00,000 to ₹10,00,000, the tax rate has been lowered from 15% to 10%.

These adjustments result in a total tax saving of 10,000 for individuals earning above 10,00,000 under the new tax regime.

Moreover, the standard deduction has increased from ₹50,000 to 75,000, contributing to potential overall tax savings of up to 17,500 (before accounting for surcharge and cess) under the new tax regime.

The decision for each taxpayer to switch from the old tax regime to the new one hinges on the deductions they need to claim for their tax liability under the old regime to be lower than that under the new regime. This required level of deductions fluctuates based on income levels.