**Union Finance Minister Nirmala Sitharaman Updates Direct Income Tax Rates and Benefits**
Today, Union Finance Minister Nirmala Sitharaman announced revisions to the direct income tax rates under the new tax regime. The updated rates are as follows:
- Income up to ₹3 lakh: No tax
- Income from ₹3 lakh to ₹7 lakh: 5% tax
- Income from ₹7 lakh to ₹10 lakh: 10% tax
- Income from ₹10 lakh to ₹12 lakh: 15% tax
- Income from ₹12 lakh to ₹15 lakh: 20% tax
- Income above ₹15 lakh: 30% tax
Previously, the new regime tax rates were:
- Income up to ₹3 lakh: No tax
- Income from ₹3 lakh to ₹6 lakh: 5% tax
- Income from ₹6 lakh to ₹9 lakh: 10% tax
- Income from ₹9 lakh to ₹12 lakh: 15% tax
- Income from ₹12 lakh to ₹15 lakh: 20% tax
- Income above ₹15 lakh: 30% tax
In addition, Sitharaman has increased the standard deduction under the new tax regime from ₹50,000 to ₹75,000. This adjustment provides the following tax benefits:
- ₹5,200 benefit for those earning above ₹8 lakh
- ₹17,500 benefit for those earning ₹15 lakh and above
The tax rates under the old tax regime remain unchanged:
- Income up to ₹2.5 lakh: No tax
- Income from ₹2.5 lakh to ₹5 lakh: 5% tax
- Income from ₹5 lakh to ₹10 lakh: 20% tax
- Income above ₹10 lakh: 30% tax
Regarding tax reassessment, the Finance Minister stated that reassessment can only be initiated after three years if the escaped income exceeds ₹50 lakh.
**Standard Deduction & Family Pension Deduction**
The Union Budget 2024-25 introduces changes to standard deductions and deductions on family pension under the Income Tax Act. The revised provisions are:
- For salary computations under the new tax regime, the standard deduction limit will be increased from ₹50,000 to ₹75,000.
- For family pensions, the deduction will be raised from ₹15,000 to ₹25,000.
**Enhanced Deduction for Pension Contributions**
An amendment has been proposed to increase the allowed deduction for employer contributions to pension schemes under Section 80CCD. The new provisions are:
- Employers can now deduct up to 14% of an employee's salary (previously 10%) when contributing to pension schemes.
- For contributions by non-government employers, the deduction will be increased to 14% of the employee's salary, but only if the salary is taxed under the new regime.
**Donations to National Sports Development Fund**
The Finance Minister also announced that donations to the National Sports Development Fund will be eligible for tax deductions under Section 80G. This amendment clarifies the fund’s name and ensures consistency in tax benefits.
These amendments will come into effect from April 1, 2025, and will apply to the assessment year 2025-2026 and beyond.
TAGS: Union Finance Minister Nirmala Sitharaman updates direct income tax rates increases standard deduction revises pension contribution deductions adjusts family pension deductions and clarifies tax benefits for donations to the National Sports Development Fund effective April 1 2025
