BREAKING: Good News For Middle Class As New Income Tax Regime Ensures Tax Saving Worth Rs 17,500

New Delhi: In a big relief for taxpayers, Union Finance Minister Nirmala Sitharaman announced on Tuesday an increase in the standard deduction under the new tax regime, raising it to Rs 75,000 from the previous Rs 50,000. This revision is set to provide salaried employees with a tax saving of Rs 17,500. The move comes as a major relief to the middle class, who have been feeling the pinch of high tax burdens.

“Coming to Personal Income Tax Rates, I have two announcements to make for those opting for the new tax regime. First, the standard deduction for salaried employees is proposed to be increased from Rs 50,000/- to Rs 75,000/-. Similarly, the deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000/- to Rs 25,000/-. This will provide relief to about four crore salaried individuals and pensioners.  As a result of these changes, a salaried employee in the new tax regime stands to save up to Rs 17,500/- in income tax,” said FM Nirmala Sitharaman.

Revised  Tax structure in new tax regime

• 0-3 lakh rupees - NIL tax
• 3-7 lakh rupees - 5% tax
• 7-10 lakh rupees - 10% tax
• 10-12 lakh rupees - 15% tax
• 12-15 lakh rupees - 20% tax
• Above 15 lakh rupees - 30% tax

A standard deduction is a fixed amount that allows individuals to reduce their taxable income without requiring receipts or proof of expenses, thereby lowering their overall tax liability.

Last year's budget initially set the standard deduction for salaried employees and pensioners at ₹50,000. The increase to ₹75,000 marks a notable enhancement in tax benefits. Furthermore, the income threshold for tax relief under Section 87A has been raised to ₹7 lakh, adding an extra layer of financial relief for eligible taxpayers. This adjustment aims to alleviate the tax burden on the middle class and provide greater financial flexibility.