On Tuesday, 23^rd July, Finance Minister Nirmala Sitharaman presented the first budget of Modi 3.0. The Indian Budget 2024 has introduced several noteworthy changes aimed at stimulating the economy, fostering growth, and providing relief to taxpayers. This year’s budget focuses on infrastructure development, digital economy, and tax reforms. Let’s delve into the details and understand what these changes mean for you. 

Understanding the Tax Regime: Old vs. New 

Old Tax Regime  

The Old Tax Regime, which has been in place for several years, allows taxpayers to claim various exemptions and deductions to reduce their taxable income. Some of the common deductions include:  

1. Section 80C: Deductions up to INR 1.5 lakh for investments in PPF, EPF, NSC, ELSS, etc. 

2. Section 80D: Deductions for health insurance premiums. 

3. House Rent Allowance (HRA): Exemptions for rent paid. 

4. Standard Deduction: A fixed deduction from salary income. 

This regime provides significant tax-saving opportunities but requires meticulous planning and documentation. 

New Tax Regime  

Introduced in the Budget 2020, the New Tax Regime offers lower tax rates but eliminates most of the deductions and exemptions available under the Old Tax Regime. The goal is to simplify the tax structure and reduce the compliance burden on taxpayers. The key features include:  

1. Simplified Tax Slabs: Reduced tax rates across various income brackets. 

2. No Deductions or Exemptions: Most deductions and exemptions are not available. 

3. Optional: Taxpayers can choose between the Old Tax Regime and the New Tax Regime based on what suits them best. 

Priorities of Budget 2024 

The finance minister said, for pursuit of ‘Viksit Bharat’, the budget envisages sustained efforts on the following 9 priorities for generating ample opportunities for all.  

• Productivity and resilience in Agriculture 

• Employment & Skilling 

• Inclusive Human Resource Development and Social Justice 

• Manufacturing & Services 

• Urban Development   

• Energy Security 

• Infrastructure 

• Innovation, Research & Development and 

• Next Generation Reforms 

Key Highlights of the Indian Budget 2024  

1. Income Tax Slabs Revised: The Budget 2024 has revised the income tax slabs under the New Tax Regime, making it more attractive for taxpayers. The new slabs are designed to offer relief to the middle class and encourage more people to opt for the simplified regime. 

2. Increased Focus on Digital Economy: Significant investments have been announced to boost digital infrastructure, promoting a cashless economy and digital inclusion. 

3. Infrastructure Development: Enhanced budget allocation for roadways, railways, and urban infrastructure to support economic growth. 

4. Healthcare and Education: Increased funding for healthcare and education sectors, aiming to improve public health and literacy rates. 

5. Agriculture and Rural Development: Measures to support farmers and promote rural development, ensuring sustainable growth in these sectors. 

Choosing the Right Tax Regime 

Deciding between the Old Tax Regime and the New Tax Regime depends on your financial situation and tax-saving preferences. Here are a few pointers to help you decide:  

• Old Tax Regime: Opt for this if you have significant investments in tax-saving instruments and can claim substantial deductions and exemptions. 

• New Tax Regime: Choose this if you prefer a straightforward tax calculation with lower rates and do not have many deductions to claim. 

The Indian Budget 2024 brings promising changes aimed at economic growth and providing relief to taxpayers. By understanding the differences between the Old Tax Regime and the New Tax Regime, you can make informed decisions that best suit your financial goals. Keep an eye on the latest updates and consult with a tax advisor to optimize your tax planning under the new budget provisions.