In the recently unveiled Budget 2024, major changes have been introduced to the income tax slabs for the salaried class. Starting from July 1, 2024, higher income tax rates will apply to various income brackets, with a top rate of 35% for the highest earners. The adjustments aim to increase government revenues while maintaining some relief for lower-income segments.
Key Changes in Budget 2024
According to Budget 2024, the taxable income threshold for the salaried class has undergone a major revision. Individuals earning up to Rs. 600,000 annually will continue to enjoy a tax-free status, ensuring that the lower-income segment remains unaffected by these changes. For those with an annual income between Rs. 600,000 and Rs. 1,200,000, the tax rate has been set at 5%, translating to an annual tax of Rs. 2,500 for the upper end of this bracket, doubling the previous rate of Rs. 1,250.
Impact on Higher Income Brackets
The new tax regime in Budget 2024 also introduces substantial increases for higher income brackets. For annual incomes ranging from Rs. 1,200,000 to Rs. 2,200,000, the tax rate has been elevated to 15%, resulting in a rise in monthly tax obligations from Rs. 11,667 to Rs. 15,000 for those earning Rs. 183,344 monthly. Similarly, incomes between Rs. 2,200,000 and Rs. 3,200,000 will be taxed at 25%, meaning a monthly salary of Rs. 267,667 will now attract a tax of Rs. 35,834, up from Rs. 28,770.
The most notable change is for individuals with annual incomes exceeding Rs. 4.1 million, who will now face a tax rate of 35%. This highest bracket reflects the government’s effort to impose a heavier tax burden on the wealthiest individuals, potentially bringing in significant revenue to fund public expenditures.
Overall, Budget 2024 marks a notable shift in the taxation policy for the salaried class, particularly targeting higher-income individuals to contribute a larger share.
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